U.K. Retains Benchmark Interest Rate At 5 Percent, EU At 4.25 Percent

London, England (AHN) - Following the lead of other industrialized nations reeling from economic slowdown, the Bank of England announced Thursday it will retain its benchmark interest rate at 5 percent.

On the same day, the European Union Central Bank adopted a similar move and kept its 4.25 percent interest rate.

Earlier this week, Canada retained its benchmark rates at 3 percent. Only Australia cut its interest rate to 7 percent.

The Monetary Policy Committee of the Bank of England said it stuck to the current 5 percent rate because it could not reduce rates while Britain's inflation is double the bank's target of 2 percent and may even go up in the coming weeks.

British economist believe that it is inevitable that the Bank of England would have to cut interest rates in the future. Roger Bootle, economic adviser to Deloitte, explained to the U.K. Telegraph, "Lingering inflation concerns kept the Monetary Policy Committee's finger off the interest rate trigger again today. But it is only a matter of time before it is forced to respond to the rapidly deteriorating outlook for the economy by cutting rates very aggressively."

The decision by the ECB not to alter the interest rate was in line with analysts' forecasts. On Thursday, ECB head Jean-Claude Trichet will disclose new growth and inflation predictions for the 15-nation Euro Zone amid some members like Spain, Italy and Ireland teetering on the brink of recession.