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Interest rates stay at 5.25%

The Bank of England has elected to keep interest rates at 5.25 per cent.

Slowing consumer spending had led to some analysts calling for a cut in rates in order to boost spending.

Reducing rates generally leads to reductions in home loan and personal loan repayments - and therefore encourages more people to take out credit.

However, cuts can also lead to greater rates of inflation - and in recent times there have been significant price increases in food and utilities bills.

Analysts are predicting that interest rate reductions will be made later in the year.

Henk Potts at Barclay's commented: "The MPC now has to respond to the effects of slowing economic growth and the ongoing threat of inflation, a fine but difficult balancing act.

"We think that [they] will cut rates by a further 25 basis points in May and August."

The Bank has reduced interest rates twice over the past five months, from a high of 5.75 per cent.

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