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UK interest rates held at 5.25%

Capital Economics said the “surprise decision” to leave interest rates unchanged “probably means that rates are already at their peak”. It said that Bank’s statement did not say that rates had peaked and had retained its hawkish guidance they would stay “sufficiently restrictive for sufficiently long”. However, Capital Economics regarded this as an attempt by the Bank to give it the “flexibility to respond to new developments”, such as rebound in services inflation of a further leap in oil prices.

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