Bank of England holds interest rate at 5.75 percent


The Bank of England kept official interest rates steady for a second month running on Thursday, and said it was keeping a close eye on market developments to see how they would affect companies and consumers.

Still, the BoE reiterated that its main job was to keep inflation on track to hit the 2 percent target, and noted that price pressures remain elevated and there appeared to be little spare capacity in the economy.

Nevertheless, the Monetary Policy Committee (MPC) noted that pay pressures were muted and there was some evidence that consumer spending was slowing."It is too soon to tell how far the disruption in financial markets will impair the availability of credit to companies and households ... The MPC is monitoring closely the evolution of both credit spreads and the quantities of credit extended," it said.

The British pound fell after the statement and interest rate futures rose as markets took discussion of the market turmoil, which has sent three-month interbank lending rates to 8-1/2 year highs, as a dovish sign.


TradingEconomics.com, Reuters
9/6/2007 6:13:20 AM