Articles > May Interest Rate Meeting

The level of interest rates look set to remain stable in the short and near term, as figures from the wider economy have shown good performance over the last month, which has greatly eased the pressure on the MPC (Monetary Policy Committee) to reduce rates.

Both the retail, and more surprisingly, the manufacturing sectors saw improvements during April, with the latter of these showing an increase that was well above expectations.

With much of the pressure on the Bank to drop interest rates in previous months coming from these sectors, and in particular the manufacturers, this balanced growth in the UK economy eases this pressure a great deal, this combined with the fact that the housing market has been doing well during the previous two quarters means that any rate cuts are looking unlikely in the short term, and even the near term.

The rate-setting meeting held by the MPC this month, which many analysts had only a few months ago predicted would see a cut in rates, saw rates remain unchanged at their current four and a half percent. With the changes in the economy that have taken place recently affecting the rate decision, it was thought that this May’s meeting was going to result in unchanged rates.

What does this all mean for the average borrower? Well, in simple terms it means that things are going to remain at status quo for the foreseeable future – the cost of borrowing isn’t going to increase, nor is it going to be lessened. While not exactly being the good news to borrowers ears that a rate cut is, knowing that rates are likely to remain stable for the near term is in a way good news, as it allows borrowers to plan their finances with relative security in that rates will not rise and increase their monthly bills.