LONDON, Aug 7: The Bank of England froze British interest rates at 5.0 per cent on Thursday for the fourth month in a row as it mulled slowing economic growth and high inflation.

The expected decision comes as the BoE, in line with major Western central banks, faces a dilemma between cutting short-term rates to boost growth, or lifting them to keep rising inflation in check.

The US Federal Reserve left American interest rates at 2.0 per cent on Tuesday, as the world’s biggest economy continued to weaken.

“We believe the Bank of England really had little option but to keep interest rates at 5.00 per cent,” said Global Insight economist Howard Archer.

“The ever growing likelihood of recession calls for lower interest rates, yet this is precluded by elevated inflation levels and risks.”

Market participants will focus next Wednesday on a quarterly report from the BoE that will outline its forecasts for economic growth and inflation.

“All eyes will now be on next week’s Inflation Report for clues about the near-term policy path,” said Lehman Brothers analyst Michael Hume. “We expect a set of forecasts consistent with rates remaining on hold for the time being reflecting a very concerning near-term inflation outlook and the risk that this may lead to second-round effects on wages and prices.”

The British central bank gave no reasoning behind its latest decision as is customary when no change is made to the “repo” rate at which the BoE lends cash to commercial banks.—AFP