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News - Interest rate Autumn 2007

September 6th - Interest rate predictions changing due to money-market crisis

The recent credit market crisis, rooted in the US sub-prime mortgages lending, has caused a change in how economists are viewing the UK interest rate. The Bank of England decided to hold the base rate at 5.75% this month which has not surprised the financial pundits. However, the predicted interest rise to 6% by the autumn no longer seems such a definite.

The financial market is still reeling from the crisis and the ripples are likely to continue to affect the worldwide lending market. Many analysts are now predicting that the interest rate should change direction, and be lowered in the next few months to ward off potential recession.

Update September 6th - The Bank of England left base interest rates on hold at 5.75 per cent again.

August 2nd 2007 - The Bank of England's Monetary Policy Committee reviewed the UK's basic interest rate currently at 5.75% today, and decided to keep the present rate. Financial analysts expected this decision after last month’s rate rise. The rise to 5.75% was the fifth interest rate rise in a year, introduced in an effort to curb the UK's inflation rate. The last change in the interest rate was an increase of 0.25 per cent to 5.75% in July 2007 and prior to that, an increase of 0.25 per cent to 5.5% in May 2007.

The last month following the MPC's 6-3 decision to raise the rate has seen a slight slowing of the economy with mortgage approvals and inflation down, though still slightly above the government's target.

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