Rates held at 0.5%

THE Bank of England left interest rates on hold at 0.5% again today.

Concerns over the fragility of the economy appear to have outweighed fears that the Bank is above its inflation target.

The cost of borrowing has been set at the historic low of 0.5% since March 2009 and economists do not expect any change until well into next year.

Last month inflation rose to 3.2%, higher than the Bank’s 2% target. The monetary policty committee’s rates meeting was the last of 2010. There was no change to the Bank’s strategy of quantitative easing which stands at £200bn.

David Ost, North West region director of EEF, the manufacturers’ organisation said: “The rapid global recovery is pushing up commodity prices and has used up most of the capacity left in UK manufacturing after the recession ended.

“So while we are likely to see inflation above target for much of the next year, wage pressures remain muted for now and public sector cuts are on the horizon. In view of all these factors, the medium-term outlook for inflation means the MPC should keep rates and asset purchases on hold to maintain growth through 2011.”