Bank of England leaves rates on hold

(Sharecast News) - The Bank of England left interest rates on hold on Thursday, as widely expected, despite falling inflation. The Monetary Policy Committee voted by a majority of seven to two to keep the cost of borrowing at a sixteen year-high of 5.25%.

Data on Wednesday showed inflation fallen back to the BoE's 2% target for the first time in three years.

However, core inflation - which strips out more volatile elements such as food and energy - remains well above target, at 3.5%. Services inflation also remains stubbornly high, at 5.7%.

Most analysts also did not expect the MPC to move ahead of next month's general election.

Opinion is split, however, over whether the MPC will cut rates later this summer or hold off until early autumn.

Central banks around the world have hiked rates in recent years, as they looked to tackle surging inflation.

But with inflation now well off peaks, most are now looking to cut the cost of borrowing. The European Central Bank reduced rates by 25 basis points to 3.75% earlier this month, for the first time in five years.

However, it is not thought it will cut again until the autumn.