Bank of England holds interest rates
Despite the recent gloomy economic news, the Bank’s nine-man MPC has kept rates at 0.5% and held the QE programme
The Bank of England left interest rates on hold on Thursday as it adopted a wait-and-see approach to the ailing UK economy.
Despite evidence of a deepening double-dip recession, Threadneedle Street’s nine-strong monetary policy committee took no action at the end of its two-day meeting.
The Bank left its key interest rate at 0.5% and decided not to increase its quantitative easing programme, under which it has already announced plans to buy a total of £375bn of bonds in the hope of boosting the flow of credit.
Financial markets had expected the Bank to sit on its hands this month despite the downbeat economic news.
The Bank announced a £50bn expansion of QE last month and has signalled that it would like to monitor the impact of its new Funding For Lending scheme before providing any extra stimulus to growth.
“We do not expect any further policy changes until the November MPC meeting at the earliest,” said James Knightley at ING. “Even then, we suspect it would be an expansion of QE over an interest rate cut.”
Howard Archer at IHS Global Insight said: “We now believe that a further £50bn dosage of QE is highly likely, which would take the stock up to £425bn, but at this stage we believe that the MPC will wait until the current extension runs out in November before acting, especially as the Funding For Lending scheme will hopefully increasingly take effect.”