Bank holds base rate

The Bank of England's monetary policy committee (MPC) has voted to hold the base rate at five per cent.

At noon today the body said there would be no change to the base rate, which was last altered when it was cut from 5.25 per cent in April.

Since then consumer prices index inflation has jumped to three per cent and the May quarterly inflation report has stated that the outlook is worse than in February.

If inflation climbs any higher than its current level this would oblige Bank of England governor Mervyn King to write an open letter to chancellor of the exchequer Alistair Darling explaining how the MPC planned to tackle the issue.

Such considerations may have influenced the decision.

The decision was widely predicted, with a Reuters poll last week showing that just two out of 71 economists believed the MPC would lower the rate.

With no improvement in the affordability of mortgages as a result of a cut, some would-be homeowners may consider using the self build method as an alternative and potentially cheaper way of getting on the housing ladder.