UK Rates Unchanged

The decision to leave rates unchanged was widely expected, given the Bank of England’s current catch-22 of keeping inflation in check whilst trying to anticipate any downside effects of the credit market turmoil on the UK economy.

From a political perspective, leaving rates unchanged today makes a cut in November or December unlikely, or at least difficult, were an election to be called in the next few days. The Bank will be all too aware of the sensitivity of cutting interest rates around an election, particularly following the Northern Rock controversy.