Interest rates expected to be held at 0.5 per cent

Monitary Policy Committee votes for a hold, with Mervyn King expected to follow.

A freeze in interest rates, at 0.5 per cent, is expected to be announced by the Bank of England next week.

This comes despite an inflation rise of around 4 per cent over the past year. Some Monitary Policy Committee members have argued that a rise in interest rates is needed to deal with the inflation.

However, though an increase in manufacturing and exports revenues reduced the trade in goods shortfall to £7.1bn in January, it is still possible that a rise in interest rates could potentially lead to a period of stagnation in the economy due to its fragile state.

After the government cuts are made in April, a rise in interest rates is expected by much of the City for May.