So now we know.

The Monetary Policy Committee of the Bank of England has decided to keep interest rates unchanged at 5.5%.

The Bank faced a very difficult decision, having to balance indications of growing inflationary pressures against signs of an economic slowdown, particularly in consumer spending.
The decision will disappoint homeowners and retailers alike who had called for a cut after disappointing Xmas results.

Although rates have been put on hold this month, they are now almost certain to be cut in February. Some economists are calling for a cut of 0.5%, but I think that’s highly unlikely. A cut of 0.25% followed by another one perhaps in April seems to be on the cards.

While a rate cut would have raised both existing borrowers and potential first time buyers’ confidence, it could also have risked adding to price pressures growing on the back of higher oil, gas, electricity and food bills.

It will be interesting to see how close the vote was.