October 05, 2007	Friday	Ramazan 22, 1428

LONDON, Oct 4: The Bank of England held its key interest rate at 5.75 per cent on Thursday, as the central bank took stock of recent turmoil on world financial markets and a crisis at British lender Northern Rock.

“A no-change policy outcome was widely expected today,” said CIBC economist Audrey Childe-Freeman, referring to the BoE decision.

On Thursday, the BoE’s Monetary Policy Committee (MPC) gave no insight into its October decision, as is customary when no change is made to the so-called “repo” rate -- at which it lends to commercial banks.

Market watchers will have to wait until October 17, when minutes from this week’s meeting are published.

However, after the BoE put rates on ice in September, it took the rare step of issuing an explanatory statement, arguing that it was too soon to assess the economic effects of the global credit squeeze.

Before the recent financial markets chaos unfolded, many experts predicted the BoE might hike rates to 6.00 percent before the end of the 2007 to fight inflation.

However, many analysts are now predicting the central bank will change its tack.

“In the current context and bearing in mind last month’s policy statement, it is clear that the MPC is likely to have moved away from a tightening psychology to an easing psychology,” said Childe-Freeman of CIBC.

Thursday’s rate decision marked the third month in a row that British borrowing costs have stood at 5.75 per cent -- which is the highest level since 2001.—AFP