The Bank of England has kept interest rates on hold again today, at their historic low of 0.5%.
At the last meeting of the Monetary Policy Committee (MPC), two of the nine members voted for a rate rise.
The MPC has been coming under growing pressure to start increasing interest rates, to bring stubbornly high levels of price inflation back under control.
We think they made the right decision today not to increase rates.
Price inflation is currently being driven by a combination of temporary measures (such as VAT) and imported inflation (including commodity and food prices). To increase domestic interest rates today would have damaged consumer confidence and done little to bring down inflation.
It will be interesting to see the minutes of this latest MPC meeting when they are published, to see how many members voted for a rate rise.
We do expect interest rates to start increasing later this year, but not in the short term.
