Bank of England holds key rate

In a key move, the Bank of England holds base rate at 5.5 per cent. Consuming spending drops and housing market concerns help to encourage rate hold.

In a move many economists believe is necessary, the Bank of England holds strong the key base interest rate. It will remain at 5.5 per cent. A month ago, the Bank dropped the rate in hopes of moving the economy forward.

The Monetary Policy Committee will monitor the drop in last month's rate before making additional changes, which likely will not happen until at least next month. This will allow for lenders to analyze how the rate drop has helped in key areas such as consumer spending and the housing market, two areas which spurred both the initial rate reduction and the current hold. With the rise in oil prices, inflation is a factor holding additional change back.

Meanwhile, UK Prime Minister Gordon Brown offers encouragement saying that the economy can overcome the global slowdown. He says that "low interest rates" coupled with "low inflation" will keep the economy on track for growth.

Jean-Claude Tricket, who is the European Central Bank President, says that the bank is working to act pre-emptively in order to protect the Euro. The European Central Bank also maintained key interest rates. In remarks made Thursday, he says, "We are in position of total alertness and we say very, very clearly to all decision makers in all countries in all the euro area, which makes a lot of decision makers, in the public and private sector…we call upon you not to let the spiralling of this headline inflation which comes out from oil, commodities…" to continue.

Economists and investors have mixed feelings about the lack of a cut in this key rate. UK stocks fell on the news of the decision as well. Many economists were hoping for a drop in the rate yet again this month.