Bank of England holds firm again on rates

BANK of England policy makers have opted to continue with the freeze on interest rates as they attempt to bolster the UK economy.

The Bank’s Monetary Policy Committee has also resisted the temptation to pump more money into the economy in the form of October’s £75bn extension of Quantitative Easing.

Confidence levels at the start of the New Year remain fragile and lingering fears over the health of the eurozone continue to cast a cloud over the economy.

Dr Brian Sloan, chief economist at Greater Manchester Chamber of Commerce, said  the decision was not a surprise, adding: “We do not share the views of some other organisations that have called for another £50bn extension to the programme to weaken Sterling to assist our exporters.

“Such a move is unlikely to have the desired effect, as yesterday’s trade balance figures show we are a long way off rebalancing the economy towards exports. Export demand has weakened as a result of a global slowdown, not the relative value of Sterling.

“The rebalancing of the economy needs time to adjust and the Bank’s decision today is the right one; it is the Government that needs to do more to encourage the rebalancing of the economy and setting the conditions that will improve business confidence and investment that will sustain growth.”

He said the Chamber’s view was that investment in infrastructure projects should be ramped-up and “costly” employment taxes and legislation must be tackled to encourage inward investment from overseas to create jobs.