UK interest rates to remain on hold today

| August 4, 2011
”UK

The Bank of England’s Monetary Policy Committee (MPC) commenced its two-day rate-setting meeting yesterday and interest rates are expected to remain on hold at the record low of 0.5% – where they have been since March 2009.

The bank is presented with a dilemma as it comes under pressure to raise interest rates to combat stubbornly high inflation – which is currently running at more than double the 2% target.

However, the economic recovery appears to be losing momentum so the central bank has said it is reluctant at this stage to lift interest rates as it could be harmful to the recovery.

The majority of economists believe rates will remain at the historic low until the first quarter of 2012.

However, many believe a fresh round of quantitative easing (QE) will be required at some point in the near future to stimulate the economy.

The Bank of England will announce its decision today at 12:00pm.

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