The Bank of England’s base interest rate will stay at 0.5 per cent following a Monetary Policy Committee vote this morning.
The rate was dropped to its
current historic low in March 2009 and has sat there for five years.
Base rate changes have a major impact on the mortgage market – particularly tracker mortgages, which are pinned to the base rate plus an agreed percentage.
Barry Naisbitt, chief economist at Santander UK, said the committee’s decision came as no surprise.
Despite previous hints from Bank of England governor Mark Carney that a rate hike could be on its way, “there has not been any economic news in the past month significant enough to support a change in view from last month,” Naisbitt said.
“The decision was, however, made against a background of continued positive news on economic activity, with the survey indicators of economic activity continuing to show strong readings in June, indicating that economic growth in the second quarter is likely to show similar strength to the first quarter.
“In addition, the unemployment rate has fallen further. But so, somewhat unexpectedly, has inflation, which at 1.5 per cent is markedly below the 2 per cent target. This provides scope for the MPC to hold rates at their current level for a while longer.”
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