BoE maintains interest rate at 5.5%

The Bank of England’s Monetary Policy Committee voted on June 7 to maintain the official Bank Rate paid on commercial bank reserves at 5.5%.

The previous change in Bank Rate was an increase of 0.25 percentage points to 5.5% on 10 May 2007. The Committee noted at its May meeting that the central projection, under the assumption that Bank Rate followed market yields, was for inflation to fall back sharply in the near term and then to settle around the2%  target in the medium term.

Given that outlook and bearing in mind that the balance of risks to inflation was to the upside, the Committee judged that an increase of 0.25 percentage points in Bank Rate to 5.5%was necessary to meet the target for CPI inflation over the medium term. Short-term sterling rates suggested that market participants expected Bank Rate to rise towards 5.75% bythe end of 2007, easing back a little subsequently.

Bank of England
6/18/2007 5:00:57 PM