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Rates held due to economy fears

The Bank Of England's Monetary Policy Committee (MPC) voted six to three in favour of holding interest rates at their historic low of 0.5 per cent this month, minutes of its meeting have revealed.

Policymakers held back on hiking rates amid concerns that not enough time had passed to be sure of the economic recovery's security.

The uncertainty was fuelled by surveys showing mixed data for the economy, the minutes of the MPC meeting showed.

The minutes also suggested that although consumption growth would remain weak for now, the economy would probably bounce back from its recent "soft patch".

There was still uncertainty over the near-term economic outlook, heightened by the impact of the royal wedding and the Japanese earthquake and tsunami, which were likely to add some volatility to quarterly GDP in the coming quarters.

The six members who decided against a rate rise said such a move could further hit consumer confidence. The Bank's decision was made before official figures revealed the CPI measure of inflation rose to 4.5 per cent in April, its highest level in more than two years.

Copyright © Press Association 2011

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