Have UK interest rates peaked at 5.75%?

The Monetary Policy Committee (those seven men and two women in suits who decide how much your mortgage is going to cost you each month) decided today to keep UK interest rates on hold at 5.75%.

This decision was widely expected following weeks of uncertainty in the money markets following the sub-prime mortgage 'crisis' in America. Recent inflation figures also appeared to be showing a slow down so another rate rise probably would have been a step too far.

Richard Dingwall-Smith, the Chief Economist at Scottish Widows Investment Partnership, thinks that the risk of UK interest rates going up again this year to 6% has now receded. He commented earlier:

"We believe that the official Bank Rate has now reached its peak given the developing UK economic background. Growth currently running at a buoyant 3% is set to slow back to a muted pace of little more than 2% in both 2008 and 2009 as the economy responds to the marked tightening of monetary policy seen over the last year."

All of this should mean good news for people with mortgages but less positive news for savers and investors. It will be very interesting to read the minutes of today's MPC meeting, when they are published in two weeks time, to find out how the voting went and if any pressure remains to increase rates one more time this year.