UK rates stay at 5%
The Bank of England has decided against back to back interest rate cuts, leaving borrowing costs at 5% and analysts confident a drop must come in June.
Today's announcement was expected to be a close call following some terrible data in recent weeks that got many wondering whether we might see a fourth cut in six months in May.
A slowdown in growth to its weakest in five years last month has sent Britain's services sector close to recession, it was revealed Tuesday, while the CBI predicts around 18,000 manufacturing jobs could go in the second quarter
Manufacturing output fell at its fastest pace in six months during March, said the Office for National Statistics, with production down 0.5%, the largest decline since September 2007.
Meanwhile, Wednesday's figures from Nationwide showed consumers are less confident than at any time since the building society began collecting data in May 2004.
Last week, the National Institute of Economic and Social Research warned that tighter credit conditions and falling house prices would cause consumer spending to dry up this year.
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Reports from two of the country's leading lenders have already shown property prices down on an annual basis for the first time since 1996.
Nationwide says the average price of a home dropped 1% in April to £178,555 on the same time last year, while Halifax figures revealed a 0.9% decline.
But the central bank will be worried that any further reduction in interest rates may fuel inflation, which Bank of England Governor Mervyn King has already warned could top 3%.
A rate at that level would force King to write a letter of explanation to Chancellor Alistair Darling. The BoE is charged with keeping consumer price inflation at 2%. It currently stands at 2.5%.
The latest report from the British Retail Consortium, released yesterday, had food prices up 0.7% in April versus a flat read in March, lifting the annual increase to 4.7% from 4.1%.
The shop price index was up 0.1% last month and was 1.2% more than April 2007.
