Breaking news: MPC holds interest rates
THE Monetary Policy Committee today maintained interest rates at 0.5% and chose not to expand the £200bn quantitative easing programme.
The decision takes the period interest rates have remained unchanged to a 21st consecutive month.
Today’s interest rates decision is brought to TheBusinessDesk.com’s readers in association with stockbrokers Redmayne-Bentley.
Senior stockbroker David Scott said: “As Britons spend heavily ahead of Chrismas and battle with the snow, today’s announcement from the Monetary Policy Committee came as a little surprise, with rates being left on hold.
“Markets hadn’t been expecting any presents from the meeting, even though 2011 is expected to see UK growth slow, taxes increase and austerity measures take effect.
“UK rates have now been on hold at 0.5pc since March 2009, the same month that the Bank of England launched its controversial £200 billion quantitative easing program. Thankfully with inflation forecast to increase further, they didn’t act like scrooge and put rates up.”
David Kern, chief economist at the British Chambers of Commerce, said: “Despite positive economic news recently, risks of a setback will inevitably increase in the first half of 2011.
“While we support the painful fiscal measures needed to stabilise Britain’s public finances, every effort must be made to minimise the danger of a downturn. In the foreseeable future, threats to growth remain more serious than the dangers of higher inflation, and the MPC must act forcefully.
“If the recovery shows signs of faltering, the MPC must stand ready to increase QE by a further £50bn in the early months of 2011.”
Ian McCafferty, CBI chief economic adviser, said: “The recent data suggest that the moderate recovery predicted earlier in the year remains on track, with export activity improving and domestic activity holding its own.
“At the same time, imported inflationary pressures remain acute, with global raw material prices continuing to edge upwards. In addition, after two years of significant private sector pay restraint, there is a likelihood of some firming in earnings growth into 2011.
“If current trends continue, by the spring I would expect the MPC to start to consider how and when to begin the process of moving monetary policy back towards a more normal footing.”
