BoE expected to keep interest rates and QE on hold
The Bank of England’s Monetary Policy Committee (MPC) is today expected to keep UK interest rates on hold at the historically low level of 0.5% for the 13th consecutive month.
In addition, the Bank is expected not to inject any more money into the economy through its quantitative easing (QE) scheme.
In February, the Bank announced it was pausing its QE programme – having already injected £200 billion into the economy to bring it out of recession.
There is very little prospect of any shift in the stance of monetary policy at Thursday’s meeting,” said Philip Shaw, economist at Investec.
“Thereafter, the election result, any significant reaction by sterling and later, the resulting stance of fiscal policy will be key determinants in the interest rate outlook,” he added.
The Bank of England will announce its decision at 12.00pm today.
Last month, the Office for National Statistics revealed the UK economy grew by 0.4% in the October to December period – slightly higher than the 0.1% and the 0.3% previously estimated.
Meanwhile, there has been positive economic data this week. Yesterday, the Organisation for Economic Co-operation and Development (OECD) said the UK economy will outperform its G7 rivals in the second quarter of 2010.
The forecast comes despite the UK economy lagging behind other major economies and being one of the last to emerge from recession – in the fourth quarter of 2009.
However, the OECD is forecasting the economy will grow at an annual rate of 3.1% – in line with the Government’s own Budget forecast and higher than the US, Germany, France, Japan and Italy.
Furthermore, leading business group, the British Chambers of Commerce (BCC) said a double-dip recession had been avoided in the first quarter and the recovery was “still on course”.
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