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| UK interest rates kept on hold at 0.5% | UK interest rates kept on hold at 0.5% |
| (40 minutes later) | |
| UK interest rates have been kept at the record low of 0.5% again by the Bank of England's Monetary Policy Committee. | UK interest rates have been kept at the record low of 0.5% again by the Bank of England's Monetary Policy Committee. |
| Recent data has underlined worries about the UK's economic recovery, which analysts took as a sign that the Bank would leave rates unchanged. | Recent data has underlined worries about the UK's economic recovery, which analysts took as a sign that the Bank would leave rates unchanged. |
| This is despite the annual rate of inflation rising to 4.5% in April, up from 4% in March, and well above the Bank's 2% target. | This is despite the annual rate of inflation rising to 4.5% in April, up from 4% in March, and well above the Bank's 2% target. |
| It is the 27th straight month that the bank has left rates unchanged. | |
| James Knightley, economist at ING, said that continuing high inflation still makes a rate rise likely this year. | James Knightley, economist at ING, said that continuing high inflation still makes a rate rise likely this year. |
| Poor UK economic data has led some economists to "push back expectations for the timing of the first UK rate hike to March next year", he said. | Poor UK economic data has led some economists to "push back expectations for the timing of the first UK rate hike to March next year", he said. |
| "However, with inflation likely to move above 5% in the next three to four months on the back of rising utility bills and food prices and with employment and employment intentions surveys remaining firm, we feel that the balance of probabilities favours an earlier move," he said. | "However, with inflation likely to move above 5% in the next three to four months on the back of rising utility bills and food prices and with employment and employment intentions surveys remaining firm, we feel that the balance of probabilities favours an earlier move," he said. |
| Economists say policymakers face a difficult choice: keep rates on hold to help the economy, or raise them to cool inflation. | |
| But higher rates increase the cost of borrowing, and there are concerns this may hurt the economic recovery. | |
| Lee Hopley, chief economist at the EEF engineering employers' group, said weak UK growth and financial troubles in the eurozone meant it was "still too early for a rate rise". | |
| New member | |
| Although the Bank was expected to leave rates unchanged, some members of the MPC have been urging an increase. | Although the Bank was expected to leave rates unchanged, some members of the MPC have been urging an increase. |
| At the MPC's meeting in May, policymakers voted six to three in favour of keeping rates on hold. | At the MPC's meeting in May, policymakers voted six to three in favour of keeping rates on hold. |
| It was the fifth month in a row that three members had voted for a rise. | It was the fifth month in a row that three members had voted for a rise. |
| Former MPC member Andrew Sentance had persistently voted for rate rises, but stepped down last month and was replaced by Ben Broadbent. | |
| Lee Hopley said it would be interesting to see if Mr Broadbent had shifted the balance of views when the MPC's minutes are published later this month. | |
| The MPC did not reveal any new quantitative easing measures. |