Bank freezes interest rates at 4.75 per cent
Oct 11, 2006
The Bank of England's Monetary Policy Committee (MPC) voted to keep interest rates unchanged at 4.75 per cent for October.
The decision was largely expected by economists, unlike August's base rate rise of 0.25 per cent, which was a surprise to many in the finance industry.
However, it is widely expected that a further rate increase will happen before the end of the year, probably next month. The head of intermediary mortgages at Alliance and Leicester shared this view, saying that with a buoyant economy and inflation that is running above target it is quite likely that rates will rise to five per cent perhaps before the end of the year.
The MPC raises and lowers interest rates in order to keep inflation close to its target of two per cent, although inflation is currently running at 2.5 per cent. A rise in the base rate has a knock-on effect on interest rates for loans and mortgages, causing repayment rates to become more expensive.
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