Interest rates held at 5.5%

7 June 2007

Your mortgage repayments should stay the same this month – as the Bank of England has held interest rates at 5.5%.

The decision to freeze rates had been expected, in order to give the Bank time to assess whether recent rate rises have had an impact on lowering inflation.  Rates have now been raised four times since last August in an attempt to rein in inflation.

However analysts say another rise in interest rates is likely this year, because price growth is still strong.  Many think there’s a strong chance of rates hitting 5.75% in the near future, to keep inflation under control.

While Consumer Price Index inflation (the Government’s preferred way of measuring inflation) fell from 3.1% to 2.8% in April, it’s still well above the Treasury’s target of 2%.

And while price growth has slowed in the housing market, the annual rate is still hovering around the 10% mark.

Many economists think that another interest rate rise, to 5.75%, could arrive as soon as July.  Leading economist, Howard Archer, said:  “The Bank of England’s decision to leave interest rates unchanged may well prove to be only a temporary reprieve.”