MPC holds rates at 0.5%

INTEREST rates were held again at 0.5% by the Bank of England today despite ongoing concerns over inflation.

The Bank of England’s rate-setting committee also chose not to expand the £200bn quantitative easing programme.

Their decision means interest rates have now remained unchanged for 26 months.

Inflation stands at 4.5%, well above the Bank’s 2% target but some economists predict rates will only rise if higher prices are sustained by wage rises.

Dr Brian Sloan, head of business and economic policy at Greater Manchester Chamber of Commerce, said: “Our Quarterly Economic Survey shows business confidence is returning, with improving investment intentions and job creation picking up, but consumers remain down beat mainly off the back of inflation eroding real incomes and tax increases.

“Although inflation will go higher before falling back, our survey is beginning to show that inflationary pressures are easing for a number of reasons and we’ve been keen to ensure that Bank hears our message. We’re sure that holding interest rates will allow consumer confidence to return as inflation eases and the jobs market improves. This course of action is the right one to sustain the recovery in the domestic economy.”