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Bank of England Keeps Current Rates
Published: May 09, 2008
London--The Bank of England left interest rates unchanged at 5 percent on Thursday after determining that the risk of inflation was too large to reduce borrowing costs, the Guardian said.
Speculation had been rampant that the bank would echo April's quarter-point cut to help ease the rough housing market.
Mortgage approvals in the U.K. are almost half the 2007 level, and home permits have fallen by two-thirds. Declining home prices and lower consumer confidence could lead to less consumer spending, economists fear.
"The housing market has come to a standstill, but there's no shortage of buyers, just a shortage of mortgages--which is now impacting the wider economy," Nicholas Leeming, of propertyfinder.com, told the Guardian. "Inflation remains a threat, but further immediate intervention, as well as future rate cuts, is now essential to stimulate lending, the housing market and the economy."
The government is scheduled to announce a plan to help troubled homeowners on Friday.
