BoE hold rates despite rising house prices and strong growth

The Bank of England held interest rates at record lows on Thursday, despite worries over an over-heating housing market and strong growth.

Rates were kept at 0.5pc, where they have been for five years by the central bank in order to underpin the recovery. The also kept its bond buying programme unchanged at $375bn.

The Monetarty Policy Committee made no statement and markets will have to wait until the minutes to see how they voted and whether some are pushing for an increase interest rates.

Markets expect the Bank to raise rates next year but some economist believe the strength of the recovery could force the committee to move earlier. Martin Weale, one of nine MPC member, said last week that borrowing costs should go up sooner rather than later.

Mark Carney, the BoE Governor, said last month that the economy was not ready for a rate rise. The Bank has said it will not raise rates to cool the housing market, which is booming in London, but would consider further controls on mortgage lending.

However, he has said Britain’s housing market has deep structural problems and rising prices represent the biggest risk to the economy, but that the Bank is watching the market closely.

The BoE's Financial Policy Committee meets on June 17 and its decision is due to be announced on June 26.

Property prices had their biggest month-on-month rise since 2002 after jumping 3.9 per cent in May, according to Halifax on Thursday.

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