Uncategorized
Base rate held for 23rd month
The Bank of England has chosen to hold base rate at 0.5%, despite increasing pressure from rising inflation.
The Bank has also chosen to maintain its quantitative easing programme, injecting £200bn to help stimulate the economy.
However, concern over inflation has led some economists to speculate that the Bank’s Monetary Policy Committee (MPC) will break the record run of base rate’s historic low by increasing it sooner than previously predicted.
Inflation remains well beyond the MPC’s target of 2% at 3.7%, as commodity prices have soared in recent months. The next inflation report, due on 16 February, will reveal if the figure has been pushed even further.
Minutes from last month’s MPC meeting revealed that the members are increasingly split over what move to make, with two members, Andrew Sentance and Martin Weale, voting for interest rates to be hiked 0.25%.
Richard Barker, mortgage manager at Norwich and Peterborough building society, said: “The decision to leave the base rate unchanged at 0.50% for the 23rd consecutive month does not come as a huge surprise.
“Whilst concerns around inflation persist, the economy still remains in a relatively fragile state and the members of the MPC are clearly worried that any increase could snuff out the economic recovery.”