Rates held at 5.25%
The Bank of England has decided that back to back interest rate cuts would present too much of a risk to inflation, prompting the central bank to hold borrowing costs at 5.25% today.
Many experts think the Monetary Policy Committee, which dropped rates by 25 basis points last month, will now wait until May before cutting again when it will have been able to assess May's inflation report.
Few were surprised as an unexpected rise in a keenly watched measure on the UK services sector for February, announced earlier this week, pretty much crushed any chance of a cut in March.
The purchasing manager's index for services climbed to 54 in February from 52.5 the month before versus analysts' expectations of a dip to 52.
That report followed Monday's stronger than expected manufacturing survey that revealed its PMI index up to 51.3 in February from a 50.7 the month before.
"Purchasing managers across the industry are seeing improvements in operating conditions, activity levels and new business wins," said Roy Ayliffe, director of professional services at the Chartered Institute of Purchasing and Supply.
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Meanwhile, shop price inflation increased sharply in the UK during February as food costs continued to grow, according to the British Retail Consortium Wednesday.
The BRC's shop price index jumped 1.3% on the year last month as food prices rose 4.6%, the biggest hike since the survey began at the end of 2006.
"There are no signs that this trend is going to change," said BRC director general Stephen Robertson. "Retailers are suffering the effects of some unavoidable rising costs, such as higher global commodity prices."
But house prices are continuing to suffer, with today's figures from Halifax-owner HBOS showing prices fell 0.3% in February, taking the annual rate of growth down to 4.2% from 4.5% a month ago.
The country's biggest mortgage lender reckons house prices will be flat in 2008 following a significant decline in housing market activity, as lenders failed to pass on the last two interest rate cuts and a reduction in the number of loans agreed.
