Interest rates rise to 5.75 per cent

Despite industry concerns over the effect the rates rise will have on consumer spending and the rate of inflation, the bank has introduced its fifth rise since August last year. “Car buyers have weathered 2007's multiple interest rate rises very well, but consumer confidence can only take so much,” said Sue Robinson, director of the RMI National Franchised Dealers Association. “Interest rates should go up no further for the time being, in order to allow for market stabilisation.”

The SMMT said GDP growth and consumer spending had been resilient but the effects of higher base rates would impact on retail purchasing and offset enticing offers in showrooms in the second half of the year. Analysts have reacted more positively to the rise. Trevor Williams, chief economist at Lloyds TSB corporate markets said: “It's true that the economy is showing some tentative signs of a slowdown. But at the same time, money supply growth continues to accelerate and the service sector remains robust. “On balance they've made the right move in opting for a rise now.”