Interest rates held at 5.25%

The Bank of England has today left interest rates on hold at 5.25% for the seventh time in a row.

The decision comes despite yesterday’s figures from the Office for National Statistics that inflation has hit the Bank of England’s target of 2% for the first time in almost three years.

Seven members of the central bank’s Monetary Policy Committee (MPC) voted to hold the rate at 5.25%, the level it has been at since August last year, with the remaining two backing a 0.25 percentage point cut.

Neil Rudge, chief banking officer for Commercial at Shawbrook, said: “The decision by the MPC to hold rates was anticipated, as many expected the upcoming general election to deter any significant moves. Indeed, we might not see the cuts we’re hoping for until the Autumn. Despite this, SMEs are showing a growing demand for funding, indicating their continued optimism and focus on growth, which will be encouraging for any new government.”

Michael McGowan, Managing Director, Foreign Exchange, Bibby Financial Services, commented: “The Bank of England’s decision to hold rates, despite a recent drop in inflation to 2%, was expected and appears to reflect a ‘wait and see’ approach until a new government has been elected.

“It means SMEs will need to wait longer for the confidence boost they need to enable them to invest in growth. Given that SMEs make up 99% of the UK’s business community, this decision also means the significant contribution they can make to the UK economy overall will be kicked further down the road, likely until after August.”