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Interest rates remain at record low

The Bank of England has kept interest rates at their record low of 0.5 per cent after gloomy economic indicators.

Figures have shown that UK growth was flat for six months and the inflation rate showed a surprise slowdown last month to four per cent.

This was double the Government's target but it eased the pressure on the Bank's monetary policy committee (MPC) to raise interest rates.

It was a very different outcome from that expected only two months ago when commentators predicted that policymakers would raise the Bank's base rate at this month's meeting due to fears over mounting inflationary pressures.

Meanwhile, a survey has shown another slowdown in growth in the services sector and a leading thinktank, the National Institute of Economic and Social Research (Niesr), warned that growth would stay weak.

Economists believe the latest set of gross domestic product (GDP) figures last week - which showed a tepid 0.5 per cent rise between January and March - killed off any chance of an interest rate hike today.

Copyright © Press Association 2011

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