UK interest rates were kept on hold at 5 percent by the Bank of England today, as fears of rising inflation prevailed over concerns of a slowing economy.
In what was likely to be a close decision, the Monetary Policy Committee has just announced that interest rates will remain at 5pc, which was in line with the expectations of many economists.
With the threat of increasing inflation caused by rising oil and food prices, it appears that the BoE decided to adopt a cautious approach, rather than helping to stimulate a sagging economy.
News that manufacturing output slumped in March by 0.5pc after growth in February illustrates that the economy is starting to slow, particularly when you take into accoount falling house prices and flagging consumer confidence.
This means that although the MPC has voted for prudence today, it is now likely to announce a further interest rate reduction to 4.75pc in June.