Bank reveals latest interest rate decision

INTEREST rates will be held at their record low of 0.5% the Bank of England’s Monetary Policy Committee announced today.

The Bank said it would not be extending its Quantitative Easing scheme at £375m. Interest rates have now been held at 0.5% for more than three years.

Katja Hall, CBI chief policy director, said:“With business surveys showing some strengthening in activity, change was unlikely this month. We expect fairly subdued conditions to continue in the coming months, but unless the economy falters, monetary policy seems likely to stay on hold.”

David Ost, North West region director at EEF, the manufacturers’ organisation, added: “Another month of no change on rates or asset purchases will surprise no one.

“The weak fourth quarter is unlikely to have swayed further members into more QE action and, if anything, some survey indicators have been a little better at the start of the year.  It’s still wait and see on how Funding for Lending, which is the main monetary game in town, will help businesses as well as households.”

Dr Brian Sloan, chief economist at Greater Manchester Chamber, added: “We welcome the Bank’s decision today, especially as it has resisted calls from the Chancellor to extend  the asset purchases beyond £375bn.

“Increasing the amount of asset purchases would add pressure on inflation, and in turn consumers and businesses. It is the Chancellor that must use his Budget Statement in March to secure the growth that has so far eluded him.”

David Swift  from stockbrokers Redmayne-Bentley said: “The news was no surprise for markets, with the UK’s central bank also opting to leave quantitative easing as it stands at £375bn.

“With many now forecasting that a rise in the interest rate could be as long as five years away, and with austerity in full-flow and threats of inflationary pressures, the recovery is likely to be a slow and steady one.”