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Bank of England set to leave interest rates unchanged

Bank of England governor Mark Carney has written to the Chancellor to explain why inflation is more than 1% off its 2% target Credit: Anthony Devlin / PA Wire/PA Images

Interest rates look set to stay on hold at 0.5% on Monday when the Bank of England announces its first post-election policy decision.

Rates have been at the historic low for six years and the slide in inflation to zero has pushed back expectations for the timing of a hike into 2016.

The Bank's Monetary Policy Committee (MPC) will announce its latest decision tomorrow having met on the day of the poll on Thursday and on Friday.

Meanwhile minutes of the April meeting of the Monetary Policy Committee (MPC) suggested a "hawkish" turn as it pointed to the possibility that inflation might recover more quickly than previously expected.

Consumer Price Index (CPI) inflation was at zero in February and March - rather than turning negative as some expected - meaning it might now have avoided this risk.

The Bank has said it expects CPI, which has been under pressure amid the sliding cost of oil and the supermarket price war, to turn negative "at some point the coming months".

However the latest meeting also said another cause of low inflation - the strength of the pound making imports cheaper - may have been feeding through to CPI more quickly than expected - meaning that a bounce-back could also come sooner.


One-in-four homeowners 'fear interest rate rise'

Credit: Yui Mok/PA Wire

One in four mortgage holders fear they will be in financial trouble when interest rates start to rise, research has found.

Some 27% of those surveyed for the Building Societies Association (BSA) and charity the Money Advice Trust think they will be in difficulty when the base rate eventually moves off its historic 0.5% low.

One in 14 (7%) people said that they would be in serious financial trouble if mortgage rates and repayments changed as they expect over the next three years, while a further one in five (20%) said this would cause them slight financial problems.

Around 39% of those surveyed said they will be forced to cut spending on holidays and eating out to cope with rate rises, while one-fifth plan to reduce spending on essentials such as clothing and food.

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