Bank of England: No rate hike

The Bank of England has been urged to resist any political pressure during the general election campaign.

At its April meeting, the Bank's monetary policy committee opted to leave rates unchanged at 4.75 per cent.

The widely anticipated decision was welcomed by experts, who also expressed concern about the impact of the general election on any future rate decisions.

Many City experts suggest a further quarter point rise could be on the cards during the course of this year.

And with the next MPC meeting originally scheduled to conclude on May 5, the Bank confirmed it would be rescheduling any announcement.

"In line with the committee's announcement last September, the timing of the general election means that the next monetary policy committee meeting will conclude on the morning of Monday 9 May, with the decision announced at 12.00pm," said a statement.

The decision was backed by business organisations.

"The independence of the Bank from the political process is critical to its continued success in keeping inflation low and stable," said CBI chief economic adviser Ian McCafferty.

"The delay in next month's decision to avoid election day reflects this."

And Graeme Leach, chief economist at the Institute of Directors, said the MPC would "rightly say that interest rate decisions are based on economic factors alone".

"But at a time when the economic tea leaves aren't clear, consideration of the general election may have subconsciously helped to maintain the status quo," he suggested.

Avoiding risk

However, there was general consensus that leaving rates on hold was the right decision for this month.

TUC chief economist Ian Brinkley backed a "steady as she goes" approach.

"With house prices stable, retail sales cooling and manufacturing still in need of as much help as it can get, an increase would have been a mistake," he said.

And McCafferty said the CBI also "recognised that stability is serving the UK economy well, holding rates for the eighth consecutive month".

"The state of the economy into the spring is not yet clear, so a rate rise this month would have been both risky and premature," he added.

For the IoD, Leach added: "The Bank of England has been faced with conflicting evidence of a slowdown recently, resulting in arguments for and against an interest rate rise.

"We still think a quarter point rise will come by June, but the situation is uncertain and when taken together with the general election campaign, probably nudged the MPC towards leaving interest rates on hold."