Bank’s latest announcement on interest rates

THE Bank of England today resisted any attempt to change its strategy on interest rates and opted to hold the level at its historic low.

Concerns any alteration may further impact on the already-fragile economy, the Bank’s Monetary Policy Committee also voted to maintain the quantitative easing programme at £375bn.

The move will please business leaders in the West Midlands, who had urged the MPC to maintain the status quo.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said that most businesses in her area felt that confidence was the key to getting growth back in the UK economy and the Bank was conscious of this and had guarded against doing anything that could damage confidence.

However, she said the chamber felt more had to be done to give businesses, which want to grow and take on new staff, the opportunity to access credit.

“That is why we welcome the news that the Government is looking into the idea of a state-backed business bank because we believe that will be a positive, long-term solution to the current problem that has certainly made life harder for firms who want to grow,” she said.

Sara Fowler, Ernst & Young’s senior partner for the Midlands, said: “It is no surprise that the MPC have taken the decision to hold interest rates at a record low of 0.5%.

“Businesses in the region will take some comfort in the fact that rates have remained the same and there was better news for manufacturers in the region this week when figures revealed that the purchasing managers’ index reached a four-month high.

“However businesses are still operating in fragile economic environment and the best opportunities for growth can still be found in the emerging markets.

“It will be those businesses that are looking to expand into Asia and other fast growth economies that will find growth during these challenging times.”

Mark Smith, regional chairman at PwC in the Midlands, said: “As the minutes of the last meeting have confirmed, members of the Monetary Policy Committee prefer to wait and see what the Funding for Lending scheme can achieve in terms of making it easier for financial institutions to lend to consumers and businesses, before making any more changes.

“This scheme is very important to the country’s future economic prosperity. Midlands businesses rely on lending to fund their investments but they are not prepared to pay over the odds. It is vital that we start to see the real cost of borrowing coming down.”