UK Interest rates hover at 5.5%

The Bank of England has held UK interest rates at 5.5% following its latest meeting, but analysts say a rate rise later this year remains likely.

The decision to freeze rates had been expected, to give the Bank time to assess the impact of recent rate rises.

UK rates have now been increased four times since August last year in an attempt to rein in inflation.

But with price growth still strong, many analysts expect a further rise to 5.75% before the end of the year.

Business groups welcomed the decision by the Monetary Policy Committee (MPC) to freeze rates.

"Whilst the door remains open for a further rise if necessary, today was not the day for tougher action," said EEF chief economist Steve Radley.

CBI chief economic adviser Ian McCafferty applauded the Bank for resisting "rushing into a rate rise that, though widely expected, may still prove unnecessary".

"Evidence is starting to emerge that the four rate rises since August are having an impact," he added.

Earlier this week, the latest survey from the British Retail Consortium recorded a drop in underlying sales during May, with recent rate rises being cited as one factor putting off shoppers.

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