unchanged interest rates

Decision by MPC is disappointing

Published:

DISAPPOINTING but hardly surprising is probably the best way to summarise the decision by the Monetary Policy Committee (MPC) to leave interest rates unchanged at 5%. With no sign of respite for those – and it is now the majority, rather than the minority – feeling the pinch from the credit crunch, high fuel and heating costs and rising food prices, there was some optimism that rates might be cut to try to kick-start the economy.

Ultimately, however, with inflation continuing to rise, the MPC arrived at the only decision it could reasonably be expected to make.

What undoubtedly forced the hand of the nine members was the weekend interview given by Chancellor Alistair Darling in which he gave the gloomiest prognosis yet for the UK economy, a comment which appears to be more opportunist and reckless with each passing day.

The downward spiral into which that plunged the pound against the dollar and the euro erased any lingering hope that the clear divisions among some of the MPC members could lead to a cut in interest rates.

Amid all the doom and gloom, perhaps the one glimmer of good news is that it is now a question of when, and not if, rates will come down.