The Bank of England's Monetary Policy Committee (MPC) has voted to keep rates on hold at 5%.
The news comes as little surprise to market commentators as the MPC seeks to prevent the rising cost of food and fuel from forming a long-term pattern of wage-price spirals.
The development will bring little cheer to borrowers, many of whom are already facing high interest costs on mortgages and unsecured debts.
However, some have doubted whether the Bank of England can continue to influence lending rates as average two-year fixed rates rose above 7% despite rate cuts in the first half of the year.
Further news from the Halifax that house prices have fallen 2% in June will also add to the troubles of the UK economy.
Duncan Samuel, managing director of Convex.net, comments: “The Bank of England seems to be adopting a ‘wait and see’ approach in the wake of rising inflation and worsening economic conditions, so I can see the rate being held in the coming months.”
The rising cost of living, coupled with higher debt repayments, means consumer spending is likely to take a further hit as confidence wanes.
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