LONDON, June 5 (UPI) -- Falling house prices did not stop the Bank of England from maintaining its key interest rate at 5 percent Thursday, economic observers said.
Home prices have fallen 6.6 percent in Britain since the first of the year, falling 2.4 percent in May to an average of $360,000, a decline of $7,800 last month, The Times of London reported.
BOE Governor Mervyn King said he would send a series of letters to British Chancellor Alistair Darling explaining why inflation is higher than the bank's 2 percent target level, the Times reported.
Inflation in Britain was 3 percent in April.
Although prices have risen, most notably for food and gas, the housing market, suffering from a lack of available credit, will likely to see further price drops, analyst said.
The lending rate, which applies to commercial bank reserve loans, was last changed in April with a reduction of 0.25 percent.
In keeping with bank policy, minutes of the Thursday's Monetary Policy Committee meeting will be released in two weeks.
