Bank of England maintains interest rates at historic low

THE Bank of England has decided to wait and see what the effect of last month’s interest rate cut will be before considering further action.

At its September meeting, the Monetary Policy Committee voted unanimously to keep interest rates at the historic low of 0.25%. The Bank is starting its £10bn programme of buying corporate bonds on September 27, which was announced last month alongside a £60bn quantitative easing programme.

In front of the Treasury Select Committee last week, Bank of England Governor Mark Carney said he was “absolutely serene” with the Bank’s actions taken in the wake of the Brexit vote.

Subsequent economic data – such as inflation remaining steady at 0.6% in August and unemployment falling last month – has suggested the immediate impact of the EU referendum decision on the economy will be more muted than feared in the days that followed the vote.

Mr Carney has said the economy’s reaction, which has been described as a post-Brexit bounce, was helped by the Bank’s “timely, comprehensive and concrete” actions it announced in early August.

Howard Archer, chief economist at IHS Global Insight, added: “The recent evidence of UK economic resilience has seemingly diluted the case for more Bank of England stimulus in the immediate future.

“Nevertheless, further Bank action remains very much on the cards, and it could still very well happen in November.”