Bank of England holds interest at 0.5 per cent

The Bank of England has kept interest rates at 0.5 per cent for the 23rd month running, but there are increasing divisions within the bank's nine-strong Monetary Policy Committee which determins the rate.

At last month's meeting two of the committee voted in favour of increasing the rate, and it is likely that more are coming round to the idea of an increase, which could come in the spring.

Inflation has been above the bank's two per cent target for over a year, and since the MPC met last month there have been warnings that inflation could rise to five per cent.

The decision to keep the rate as it is has been welcomed by businesses. The British Chamber of Commerce has warned that an increase in interest rates, in conjunction with the Government's spending cuts and the VAT rise would hamper the fragile economic recovery.

Read a full report at the Telegraph. ·