UK interest rates and QE remain on hold

| December 9, 2010 | 0 Comments

The Bank of England’s Monetary Policy Committee (MPC) has today elected to keep UK interest rates on hold at the historically low level of 0.5% – where they have been since March 2009.

Furthermore, the Bank opted not to inject any more funds into the economy via its quantitative easing (QE) scheme – introduced to stimulate growth within the economy.

Better-than-expected economic growth in the third quarter and a rise in manufacturing activity have reinforced the view that the Bank will leave QE on hold for now, despite policymaker, Adam Posen, last month, calling for an injection of £50 billion via the programme to boost the economy.

Meanwhile, at the last six rate-setting meetings, policymaker Andrew Sentance has voted for interest rates to be lifted from their current historic low to combat stubbornly high inflation.

Mr Sentance is today expected to vote for a rise in interest rates but minutes of the two-day meeting will be released on Wednesday 22 December and they will reveal how policymakers voted.

Finally, economists believe interest rates will remain on hold for the foreseeable future but QE may be restarted in the New Year, should economic growth stall.

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