No change for interest rates

THE Bank of England held interest rates at their historic low of 0.5% today.

The Bank’s Monetary Policy Committee also decided to keep the programme of quantitative easing at £200bn.

Analysts had widely forecast the MPC would hold interest rates at their record low level, despite CPI inflation remaining above target, amid ongoing concern about the strength of the UK economy.

Coverage of the MPC’s interest rates decision is brought to TheBusinessDesk.com’s readers in association with stockbrokers Redmayne-Bentley.

David Scott, senior stockbroker at Redmayne-Bentley, said today’s decision was universally expected as evidence continues to grow that the current economic “soft patch” may be developing into something more serious.

Mr Scott said: “As rate increase expectations get pushed further out, the MPC is like to have discussed in more detail policy tools to help stimulate the economy.

“In the minutes of the last meeting the use of further QE was discussed and I believe at this meeting there will have been a greater ground swell of support for more.

“With rates at rock bottom the printing of more money is really the last policy tool left open to the MPC, even though it remains a controversial experiment.”

Ian McCafferty, the CBI’s chief economic adviser, said: “Mixed messages from recent data leave the MPC in a difficult position.

“Inflation expectations are on the rise, raising questions about the Bank’s anti-inflation credibility, but activity continues to be patchy, with one-off factors such as the disruption from Japan and the extra bank holiday clouding their assessment of the underlying strength of the economy.

“This fine balance will continue in coming months. But with inflation likely to rise to 5% by the autumn, and the economy still gradually recovering, a shift in policy should not be ruled out before the end of the year.”