Interest rates on hold at 5.5%

The decision has been made by the Bank of England to keep rates at 5.5%. They have resisted pressure to make a change against growing pressure from retailers.

It must have been a tough decision with all the recent signs in consumer spending and the inflationary pressures. A rate cut could have lifted both consumer and general business confidence; it could also have risked fuelling price pressures growing on the back of higher energy and food bills. Npower increased its gas and electricity prices last month and warned other providers would follow suit.

The British Chambers of Commerce said the MPC had missed an important opportunity to underpin confidence and limit the damage to the economy.

“A modest interest rate cut would have alleviated the threats to the banking system and would have helped restore the smooth flow of credit in the economy,” said David Kern, economic adviser to the BCC.

Analysts are expecting the MPC to cut rates in February.