The move to fix rates for the coming month is highly likely to have drawn on the building inflationary pressures put on the UK economy by surging energy prices.
However many believe that the Bank must pull rates down by at least another quarter point sooner rather than later, with most who had hoped for a cut this month renewing their calls for a February cut.
For the moment at least, stretched borrowers counting the cost of Christmas will have to dig deeper into their pockets, with Grant Thornton predicting that at least 10,000 Britons a month will have to take out and IVA in 2008 in order to avoid bankruptcy.
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Ross Bowen, managing director of Connells Survey & Valuation called for more decisive action to boost confidence, whilst Abbey's chief economist, Barry Naisbitt, said that today's hold shored up the argument for a cut by the end of the quarter by allowing them to draw on fresh inflation data in four weeks' time.
InterBay's director, Colin Bell, said that the MPC must have felt that time for adjustment was key. However he stressed that it must only be a temporary measure as confidence is unlikely to improve.
Jonathan Cornell, Hampton's MD said that Thursday's decision made last month's cut look 'like a goodwill gesture,' highlighting that lenders had failed to pass on the full benefit of last month's rate cut.
"While borrowers on a mortgage tracking the Bank of England base rate should have felt the effect of last month’s cut almost immediately, those individuals sitting on their mortgage lender’s SVR rate will not be so happy and will have to wait for LIBOR rates to start to take a similar decline before they receive any respite.”
Indeed, of the UK’s mortgage lenders, 89 reduced their interest rates in the weeks since December's cut. However 18 of these did not pass on the full 0.25 per cent. Furthermore, Moneyfacts.co.uk spotted that ten lenders failed to make any adjustments at all.
With reports of the US sinking into the grip of a housing recession, Warren Bright, chief executive of propertyfinder.com, warned that the MPC's action, or lack of it could see the UK following suit.
David Newnes, MD of Your Move estate agents, concluded: "We need resolute action - not dithering. The property market, consumer confidence, and the wider economy are suffering while the MPC vacillates. Instead the MPC is fiddling while Rome burns. We need to see further interest rate cuts, soon.”
