Interest rates remain at record low

07 Aug 2015

The Bank of England’s Monetary Policy Committee (MPC) has once again decided to hold UK interest rates at the record low level of 0.5%.

However, for the first time in many months the decision was not unanimous, with one of the nine members, Ian McCafferty, voting for an increase.

There has been speculation for a while that the interest rate, which has now been held at 0.5% for more than six years, could be due for a rise. Some commenters expected two or three MPC members to vote for an increase, as Bank of England Governor Mark Carney has dropped hints that a rise was ‘drawing closer’.

But in its latest Inflation Report, the Bank described the outlook for inflation as ‘muted’ – which has led some experts to suggest that any rise could be delayed.

John Longworth, Director General of the British Chambers of Commerce, said: ‘It would have been imprudent to push through a rate rise at this moment when our economic recovery remains in need of care and encouragement. Rates will eventually have to rise and when they do, it should be done slowly and steadily. Until that moment, the Bank of England is right to keep interest rates at current levels.’

Following the announcement sterling fell against other currencies. The pound fell by a cent against the dollar before recovering slightly to stand at $1.5511, and was down nearly one euro cent against the euro at €1.4218.

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