Interest rates frozen at 5.75%

The monetary policy committee (MPC) of the Bank of England has elected to maintain interest rates at 5.75 per cent.

Many analysts expected the decision, citing the need to keep inflation down as oil prices and food costs soar.

However, others point to evidence of a slowdown in the housing market and subdued consumer confidence and claim a drop in rates would have been a better choice.

Senior economist at the Royal Institute of Chartered Surveyors (Rics) Oliver Gilmartin said: "Rics is unsurprised that the Bank of England has chosen to leave interest rates unchanged at 5.75 per cent today.

"Following recent volatility in the financial markets this is the correct decision because it's too early to tell what the wider impact on the economy will be whilst inflation remains a concern."

She added that despite the freeze financing conditions will tighten as banks become increasingly cautious towards those at the lower end of the credit spectrum.

Meanwhile, Peter Bolton King, chief executive at the NAEA, was disappointed.

"I would have hoped that the Bank of England would have considered this month's rate movement carefully as confidence in the market needs to be restored and a relaxation of interest rates would do just this," he said.

"The last 12 months has been an extremely busy period for the housing market and consumers are crying out for reassurance. Many housing market reports including the NAEA survey, clearly indicate that the housing market is slowing down on a monthly basis and agents have expressed concern on the reduced activity."


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