Bank of England keeps interest rates at 5.50%

The Bank of England voted on Thursday to keep its benchmark interest rates on hold at 5.50%. 'The recent fall in inflation has not been as dramatic as hoped, but other indicators of a cooling economy have provided enough evidence for the Bank to hold fire on raising interest rates. Although the economy keeps growing at a reasonable pace (at around 2.8% so far this year) there is evidence that the housing market is slowing and retail sales are moderating. Growth is instead coming from financial sector expansion', Tony McGough, Head of Forecasting and the Economy at Jones Lang LaSalle (JLL) commented.

He continued, 'The expectation is still for a rise in the summer, on the back of strong growth in Europe, where rates were raised yesterday (on Wednesday) to 4% (double the rate of a year and a half ago). Within the property market the rise in the cost of borrowing has started to be felt, in that some of the most leveraged deals will struggle to add up at these levels. Jones Lang LaSalle's view is that the decision is more delaying the inevitable to give people some breathing space rather than indicating a peak in the interest rate cycle.'