UK interest rates are to remain at 0.5%, marking two years at the record low, after the Bank of England resisted pressure to increase them to curb inflation.
The bank’s monetary policy committee voted to hold the rates today for the 24th consecutive month, while inflation has risen twice the bank’s target limit.
There had been speculation that interest rates could rise this month after three MPC members voted for a rise in February.
Claire Higgins, head of research at BNP Paribas Real Estate, said there would have been much debate among MPC members this time around, with the Libyan crisis pushing petrol to £6 per gallon alongside a study out today that showed private sector take-home pay growth is the lowest on record.
“This places the MPC between the proverbial rock and a hard place, with a rate rise increasing the pressure on households, but a lack of action enabling inflation to run wild,” she said.
“Given that its principal remit is to manage inflation, it will become increasingly difficult for the MPC to justify holding the base rate at its current level. It is no longer a question of whether a rise will come in 2011, but how soon.”
nick.whitten@estatesgazette.com
To access all EGi news stories and commercial property data sign up for a free trial today, or visit the subscription options page to find out more.
