INTEREST RATES are to remain unchanged at 4.5%, the Bank of England‘s Monetary Policy Committee has announced.

The decision to keep rates on hold comes despite wide speculation of a rise and warnings from Bank of England governor Mervyn King that further rises may be necessary.

Tim Porter, agriculture director at Lloyds TSB, said: “The decision to hold interest rates is no great surprise, given that the base rate has risen twice in the last two months.

“There are tentative signs that the economy and the housing market are beginning to respond to the previous increases, which may have tempted the committee to leave base rate unchanged.

“But the economy is growing quickly, and farmers need to prepare for inevitable rate rises in the near future.

“Sound financial plans, budgets and forecasts will be the farm‘s best business tools in the coming months.”

But Grant Phillips, marketing director of medium business and agriculture at Barclays, warned further rises in the base rate were still likely, and could reach around 5% in the next six months.