The Bank of England has decided to keep interest rates at 0.5%
The was speculation in the business community that May would be the month that rates started to increase again. However, BoE have conceded that the economic situation is still far from recovered. To increase borrowing costs would put many small businesses and home owners at great risk.
Rising inflation, mostly caused by increasing oil prices, has put pressure on the BoE to raise interest rates. Inflation is now at 4% which is twice the government target.
But as the UK economy has been stagnant for 6 months the bank decided to keep the rates at 0.5%.
For the UK economy to grow at th grass roots level interest rates must remain low. An increased cost of borrowing can see small businesses fold overnight, and many homeowners are relying on low interest rates to keep up with their mortgage payments. This news is a great relief to many people across the UK today.