BoE report suggests low interest rates in the short-term

| June 13, 2011 | 0 Comments

In its influential Quarterly Bulletin, the Bank of England said interest rates can be held at the historic low of 0.5% in order to prevent growth from stalling.

The statement comes despite inflation being more than double the target of 2% and many business groups are calling on the bank to lift rates to combat soaring inflation.

However, the central bank has previously stated that it has been reluctant to lift rates at this stage as the recovery is losing momentum.

The Bank has previously said inflation is rising due to higher oil and energy prices, as well as rising food costs and has said these pressures are temporary and inflation will fall back to its target by 2012.

Mervyn King, the Bank’s Governor, has reiterated that rates will be kept low to allow public spending to be cut without derailing the recovery.

He added if rates were to rise at this stage of the recovery, it could put a further strain on consumer spending and investment by industry.

In related news, the Office for National Statistics will tomorrow publish inflation figures for the month of May.

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