Bank of England holds firm on interest rates

THE Bank of England today resisted calls to slash interest rates to bolster the UK’s flagging economy.

The Bank’s Monetary Policy Committee opted to keep rates at their historic low and maintain quantitative easing at £375bn.

There had been suggestions the MPC could be contemplating a cut following the sharp drop in GDP announced last month and yesterday’s disappointing manufacturing output figures, which showed the steepest decline in the sector for three years.

The MPC will also inevitably have had one eye over its collective shoulder on events in the Eurozone, where turmoil brought on by crises in Greece and Spain continues to influence events.

Business leaders in the West Midlands had said it was critically important that interest rates were kept low as it would improve the flow of credit to businesses.
Michael Ward, president of Birmingham Chamber of Commerce Group, said business confidence badly needed a boost and firms were looking to the MPC to supply it.

He said: “When I speak to businesses they say they are doing ok and the amount of businesses which are trading successfully, many online, has gone up from a fifth to a third in the last 12 months.”  

Mike Ashton, of the West Midlands Chambers of Commerce, said: “In order for business to invest and create jobs, it is critically important to improve the flow of credit particularly for viable SMEs.  The Bank of England needs to give serious consideration to purchasing corporate assets rather than government bonds to ensure that the benefits of quantitative easing are felt in the real economy.”