Articles > Interest Rates Held

The September meeting of the Bank of England’s Monetary Policy Committee saw interest rates held at four and one-half percent, keeping with the recent two year trend of holding rates static, save for of course the quarter point cut seen last month.

The level of inflation is one of the main reasons why the rate was left unchanged, as with the recent increases in fuel and other energy costs it has been pushed in excess of the two-percent target the Bank is aiming for. With the recent events in America effecting oil production there, oil costs have risen dramatically which will have a knock-on effect not just on energy costs, but across the board on all products due to increased costs of shipping and haulage.

Increases in costs like this add to the overall inflation figure, and bringing this down, or at least preventing it from rising too steeply, is something that the MPC will certainly be concerned with over coming months, and is leading some to predict a rise in interest rates in the not to distant future.

Setting the interest rates is a complex process that requires a large number of economic factors to be taken into account, and various predictions about spending levels and inflation need to be made as well. With so many factors influencing the MPC’s decision it is difficult to predict how they will act, however the general feeling is that rates will remain unchanged again next month, and possibly be followed by a rise, although this would almost certainly wait until after the Christmas period which traditionally sees a peak in consumer spending.