Even though inflation is double the official two per cent target, it is thought by experts that the UK economy is still too fragile to support a rate rise at this stage.
The Markit/CIPS headline services PMI index fell to 54.3 in April from 57.1 in March. And although still indicating growth, it was below forecasts of 55.7.
Ian McCafferty, chief economic adviser to employers' group the CBI, said: "Given the recent mixed signals about the current strength of the economy, it is not surprising that MPC members have decided to keep interest rates on hold again.”
The weak PMI data has led analysts to predict that the rate may not rise until much later this year, with some even predicting 2012 as a suitable time for a rise.
Jonathan Samuels, chief executive of Dragonfly Property Finance, said: “Aside from the fact that inflation has fallen and the economy, at best, is flatlining, the majority of the MPC instinctively understands that raising rates at the current time could send delicate consumer confidence into freefall.
“People's disposable incomes are already in reverse but to squeeze their finances further through increased mortgage payments could be the coup de grace for both confidence and the economy.”
The Bank is now expected to downgrade its growth forecast for this year at its Inflation Report next week, following the disappointing 0.5 per cent growth in the first quarter of the year.
The minutes from yesterday's meeting will be released in two weeks' time, showing how the MPC members voted.
For more information, please visit www.milsted-langdon.co.uk
[ add comment ] ( 102 views ) | permalink