BREAKING NEWS: Interest rates held at historic low
THE Bank of England’s Monetary Policy Committee today resisted pressure to raise interest rates as the cost of borrowing remained at its record low of 0.5%.
The committee also voted to leave quantitative easing at £200bn.
Neither decision had been unexpected as the Bank looks to reduce pressure on the fragile economy and stay on track with its plan to keep inflation down to Government targets of 2%.
Ronnie Bowker, Ernst & Young’s senior partner in Birmingham, said: “While today’s interest rate decision has come as no surprise, there have been rumblings that some of the MPC members are reviewing their status as doves.
“Andrew Sentence was the first committee member to vote for a rate rise in nearly two years last month and he may be joined by some of his colleagues between now and the end of the year.
“Although inflation remains higher than the Bank of England’s target, some of the pressures which have brought this about – most notably rising oil prices and the weakness of sterling – have eased in recent weeks.
“Before any more MPC hawks take to the air, the committee should hold steady and evaluate the full extent of public sector cuts on the UK economy.”
Commenting on today’s decision, Mark Smith, regional chairman at PricewaterhouseCoopers in the Midlands, said: “Given the recent emergency budget and the news that one committee member voted for monetary policy to be tightened last month, today’s decision was always going to be closely watched by the region’s businesses and consumers.
“While concerns over inflation are mounting in some quarters, there is still an overwhelming sense that it is premature to raise rates. Policymakers are concerned about unsettling economic growth and will want to assess the impact of the austerity measures announced in last month’s emergency budget before adjusting policy. This should make for some interesting debate at coming committee meetings, though we’re still unlikely to see rates move off their current historic lows in the short term.”
