The Bank of England has announced that the base rate for August is to be held at 5% following the Monetary Policy Committee meeting, which was held last week to determine any movement in the base interest rate. It is a move that has come as no big surprise to most, with soaring inflation levels and the slowing economy making it difficult for the members of the MPC to make any changes to the base rate.

Last month’s meeting saw one member of the MPC vote for a rate cut due to the slowing economy, and another member vote for a rate increase due to the soaring rate of inflation. However, once again the majority of members seem to have voted for a steady hold on the base rate.

One economist stated: “It should not have come as surprise to anyone that, on balance, the bank felt it could do nothing but sit tight this month - a situation that is likely to prevail for a few more months.”

Another industry official said that the central bank may soon have to start considering a rate cut due to the slowing economy, stating: “The MPC continues to be pulled in opposing directions by rising inflation and slowing growth. However, the balance of risk appears to be shifting more rapidly. A cut in interest rates may be needed sooner rather than later to prevent the economy from drifting towards recession.”

As always, the British Chambers of Commerce were not happy with the decision, and one official said: “The MPC cannot ignore the fact that recession threats have worsened. While the near-term rise in inflation is unavoidable, it is also temporary as weaker growth would clearly push down inflation sharply next year. Limiting the threat of a major recession must be the priority.”

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