Policymakers at the Bank of England have voted to leaver interest rates on hold following a two day meeting in London. The decision to leave the repo rate unchanged follows last month's surprise decision by the central bank cut rates by 25 basis points to 3.75pc. The European Central Bank, which last reduced borrowing costs in December 2002, is expected to lower rates again today. The minutes of today's Bank of England meeting will be published on Wednesday 19 March, but the decision to hold rates suggest that the bank's monetary policy committee is waiting for consumer demand to slow further and for time to assess the economic impact of a war in Iraq.
The minutes of the last meeting showed that two policymakers voted against the cut, preferring to maintain the repo rate at 4.0pc. Andrew Large and Paul Tucker argued that the markets were not expecting a reduction in rates and that it would be "unwise" to lead market expectations down. They also argued that lower rates could prompt unsustainable consumer borrowing, but those in favour of a cut forecast that the recent rise in inflation would be temporary and that output was weaker than expected. //www.fxcentre.com