Bank of England freezes interest rate

The Bank of England Monetary Policy Committee has kept interest rates on hold at 4.5% for November.

The nine-member committee voted unanimously to keep base rates on hold at 4.5% in October.

Duncan Pownall, mortgage development manager at Bradford & Bingley, says: Todays decision to hold rates is no surprise, following another unanimous vote for rates to remain at 4.5% last month. Despite reports of more encouraging activity in the housing market, consumer demand on the high street remains slow and the retail sector is still crying out for a cut.

“Currently, however, the monetary policy committees main concern is to keep a lid on continuing inflationary pressure as rising oil prices take their toll.

There is still debate as to whether there will be any movement in interest rates this year. We believe it is likely that base rate will remain on hold next month unless there is very firm evidence of further weakening in the economy as a whole.

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, says: “It was widely expected there would be no change in the base rate this month, and many agree that base rates are likely to stay the same until the New Year.

“This is yet more good news for brokers, who have already experienced a recent surge in mortgage volumes in the last couple of months. Regardless of whether there is any change in the rate next month, brokers look set to finish 2005 on a strong note.

“Economists are likely to look closely at consumer spending patterns after Christmas to assess the impact of a possible rate change. If retailers do not report good sales levels over the festive period, then a rate cut could be on the cards.”