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News: Interest rates kept on hold at 4.5%

The Bank of England's interest rate-setting committee has opted to keep UK interest rates on hold at 4.5%. The decision comes after last month's close 5-4 vote to cut rates and shouldn't be viewed with any great surprise.

Indeed, the impact of Hurricane Katrina in the interim has reignited worries about oil-related inflationary pressures working their way through the economy. And with retail prices in July rising above the Bank's self imposed annual target of 2%, as they hit 2.3%, Bank of England Governor, Mervyn King (who recently warned about accelerating inflation) will have been lobbying his fellow committee members even harder than usual.

Recent economic data has painted a mixed picture of the UK economy, given faster-than-expected GDP growth in Q2 (aided by a stronger manufacturing sector) in contrast to businesses negatively impacted by rising oil prices.

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