Bank of England maintains stance on interest rates

THE Bank of England has maintained its stance on interest rates opting to keep the level at its historic low.

The Monetary Policy Committee also held off from a further injection of quantitative easing; maintaining the level at £375bn.

With the repercussions still being felt from the Chancellor’s Autumn Statement the committee decided to err on the side of caution and maintain the status quo.

The short-lived boost to the economy provided by the Olympic bounce now seems to be forgotten as the chill wind of austerity is once again set to dominate forecasts for growth.

The healing message delivered by Mr Osborne yesterday failed to persuade most analysts away from their view that any recovery is likely to take much longer than anticipated with growth set to be shallower than first thought.

The figures, published alongside the Autumn Statement, suggested inflation will fall to 2.5% in 2013 and 2.2% in 2014. The OBR had previously forecast CPI at 1.9% in each of the next two years.

Against this backdrop business leaders had been urging the Bank to maintain its stance and to give firms battling for growth any weapons it could.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, welcomed the Bank of England’s decision to keep interest rates at a record low.

She said the rates went ‘hand-in-glove’ with trying to kick-start growth in the economy.

“With very little wriggle room, the Chancellor tried in his Autumn Statement to getting the economy growing after missing the targets he set out two years ago,” she said.

“Whether he did enough will remain to be seen over the next couple of years but achieving growth is also reliant upon the lowest possible interest rates.

“The problem we have had over the past few years is that the low base rates have not been reflected in the interest rates being offered to businesses or the mortgage rates being offered to housebuyers.

“The Funding for Lending scheme has been devised to help businesses and consumers benefit from the low base rate because that is crucial in getting the economy moving again.”