Inflation Determined No Change In Base rate Say Lloyds TSB

Published: 5/9/2010

The head economist from Lloyds TSB has commented on the unchanged base rate announced today, explaining that it was the need to keep a lid on inflation that led to the decision.

Although there is still a real threat of further economic slowdown the Bank of England could not afford to cut the base rate again since the underlying rate of inflation is higher than it should be. As the Lloyds TSB pointed out, a further base rate cut could fuel more rises in inflation, completely the opposite of what is needed.

He went on to say that, as far as Lloyds TSB can see there will need to be more indications that the economy really is in a slowdown mode before base rates can be considered for reduction again.