Bank of England keeps base rate steady

Posted 2008-06-5

The Bank of England opted to freeze its base interest rate at five per cent yesterday.

Economists had not been expecting a cut, despite the need to boost the economy and stop the restrictions on mortgage lending, due to the recent jump in inflation.

Henk Potts, equity strategist at Barclays Stockbrokers, said: "The Monetary Policy Committee finds itself in the middle of a difficult balancing act, involving rising inflation on one side and slowing economic growth on the other.

"There is no doubt that UK economic growth is moderating."

In a further blow to homeowners or those looking to take out a mortgage, the interest rate announcement came as Halifax revealed house prices have fallen by 2.4 per cent in May.

The average house price is now £184,111.

It was the second biggest fall on record, with house prices declining by 2.5 per cent in March this year.

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