Bosses applaud rates freeze

BUSINESS leaders united in applauding the Bank of England for keeping interest rates on hold today and said the rates freeze should remain intact until there are clearer signs of recovery.

The widely expected decision by the Bank's monetary policy committee means the base rate has now been at a 38-year low of 4% for six months.

Ian McCafferty, chief economist at the CBI, said: 'The lack of inflationary pressure allows the Bank time to assess the strength of the recovery. It can afford to leave rates at the current level for some time.'

British Chambers of Commerce chief economist Ian Fletcher said: 'Although the case for raising rates is mounting, we believe the Bank is correct to postpone that decision.'

Stephen Radley, chief economist at the Engineering Employers' Federation, added: 'The absence of inflation anywhere but in the housing market gives the MPC time to assess the pace of recovery.' The comments came as new figures from the British Retail Consortium showed shop prices in April were only 1.07% higher than a year ago.

Financial markets were unmoved by today's decision. The FTSE 100 was down 3.9 points at 5205.2 while sterling was steady at $1.4570 and 62.20p against the euro.