Bank of England Holds Interest Rates Amid Energy Price Fears
The Bank of England's Monetary Policy Committee (MPC) has voted six to three to keep interest rates steady at 3.75 percent, a relief for Chancellor John Healey and mortgage holders.
Energy prices have been rising again in recent weeks, with fears of another inflationary shock on economists' lips. The Bank's decision is a welcome reprieve for those affected by the end of the MPC's cutting cycle.
The average new mortgage rate is now 5.59 percent, up from 4.9 percent at the beginning of the year, according to analysis from Moneyfacts. A 0.25 percent hike would increase average mortgage payments by around £450 a year.
However, the decision came closer than expected, with three dissenters voting for a hike to 4 percent, including Huw Pill, the Bank's chief economist. Pill remains 'concerned' about 'insidious second-round effects' where employees demand pay rises and employers hike prices to match.