No movement on interest rates

THE Bank of England held tight on interest rates today, as widely expected.

The Monetary Policy Committee agreed to hold the base rate at 0.5% and maintain the value of its quantitative easing programme at £375bn.

Economists expect the bank to hold rates at the record low until next year.

Further stimulus in the form of additional quantitative easing is also not expected, with the MPC voting 8-1 against extending the programme of bond purchases in December.

Last month’s surveys of purchasing managers pointed to a 0.2% dip in economic output in the fourth quarter, and figures out yesterday showed the trade deficit did not narrow as much as expected, raising the risk that the economy as a whole slowed during the period.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: “The MPC’s decision to maintain QE at £375bn and hold interest rates at 0.5% was widely expected and in our view, correct.

“Our members do not support some of the current gloom about the economy, despite of the possibility that GDP growth will slow sharply in Q4 2012. Given these circumstances, we believe that pressures for more QE should be resisted.”