No change for interest rates and QE

THE Bank of England’s monetary policy committee (MPC) opted to hold interest rates and its programme of quantitative easing today.
 
In the Budget Chancellor George Osborne tweaked the MPC’s mandate saying it would now be able to consider more than just inflation when setting interest rates.
 
But many economists do not expect more stimulus until Mark Carney – currently Canada’s central bank chief – becomes governor of the Bank of England in July.
 
British manufacturing shrank for a second successive month in March, according to the latest purchasing managers’ index, although the British Chambers of Commerce expects the UK to avoid a triple dip recession when first quarter GDP figures are released at the end of the month.
 
Last month the Prime Minister warned of the “unthinkable damage” a sharp rise in interest rates would bring to the UK economy.

Stephen Gifford, CBI director of economics, said: “Recent economic data continues to be pretty mixed and will have done little to resolve the debate around the merits of loosening policy further.

“While muted growth prospects and international uncertainty will keep open the possibility of further QE, the persistence of above-target inflation may act as a bar to looser policy.”

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