It has been announced that the base interest rate is to remain on hold at its all time low of just 0.5 percent for the month of January. The announcement was made by the Bank of England following the January Monetary Policy Committee meeting earlier this week. The base rate has been at 0.5 percent since March of last year, and this is the lowest it has ever been in the history of the Bank of England, which goes back over three centuries.
Economists have stated that the move to keep the base rate on hold has not come as any great surprise, and most do not expect the MPC to increase the base rate in the near future. The move to keep interest rates on hold has been welcomed by manufacturing and industry groups, who have said that whilst the economy has shown signs of improvement it is still fragile and there is doubt over the sustainability and strength of the recovery seen so far.
The manufacturers’ association the EEF stated: “The recovery is now underway, but its strength remains in doubt. There are a number of potential pitfalls even as the UK economy starts growing again, including cautious consumers, questions over the public finances and a still-fragile banking system.”
One economist said that 2010 would be a very difficult year for policy makers, as there were many difficult decisions to be made with regards to interest rate movement and the quantitative easing programme. The Bank of England also confirmed that the QE programme would be held at £200 billion but would continue to be reviewed. There is a chance that the QE programme may be extended next month, although most industry experts do not think that it will be extended any further in the foreseeable future.
Tags: eef, interest rates, history, bank of england, monetary policy committee, movement
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