Bank holds base rate at 5.25%

The Bank of England has held base rates at the monthly MPC meeting. The bank rate will remain at 5.25% for the seventh month in a row. The decision was not unanimous with two of the seven members of the committee voting for a quarter point cut. Five members of the MPC voted against a cut.

Unusually, the minutes of the meeting indicate that the decision of three of the committee members was finely balanced. Analysts believe that the mood of the bank has shifted to a more dovish view and that a previously ruled out cut to the base rate in August is now on the cards.

Whether inflation can be held at 2% will determine if the bank cuts rates earlier than expected and there will also be concern that holding rates high for too long will cause deflation which would also damage economic growth.