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Bank of England Keeps Rates on Hold at 5.25%

The Bank of England kept interest rates on hold at 5.25% as widely expected Thursday.

The majority of economists expected rates to remain on hold, with only 11 out of the 60 analysts polled by Reuters predicting that the BoE would increase rates.

But most experts are convinced the BoE will raise rates next month by a quarter percentage point for the fourth time since August because policymakers are worried about an increase in firms' pricing power, according to Reuters.

The biggest reaction to the decision came in the foreign exchange markets where Sterling immediately lost ground across the board.

There had been uncertainty surrounding this month’s decision due to data on Thursday showing house price inflation at a two-year high. Manufacturing output also fell at its steepest pace in 1-1/2 years, Reuters reported.

Mervyn King, the BoE Governor said last week that house price inflation may be starting to slow, but the latest Halifax numbers on Thursday showed another 1.0% rise on the month.

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