The Bank of England’s Monetary Policy Committee (MPC) has announced that interest rates will remain at 0.5%. The announcement means that the borrowing rate has remained at the same level since March 2009. The MPC also said it would not be making any changes to its £375bn of monetary stimulus it is providing through the quantitative easing programme (QE). David Kern, the chief economist at the British Chambers of Commerce, welcomed the Bank’s announcement: “The MPC made the right decision to hold interest rates and quantitative easing.”
The MPC has an inflation target of 2% and although it has been above that rate for months, the economy has been deemed too weak for the committee to raise interest rates to reduce it.Last week, figures showed that the economy was continuing to improve, with GDP growth in the second quarter doubling to 0,6%. Despite the growth, the economy is still 3.3% below levels reached before the downturn and the MPC has called the recovery weak by historical standards.Another announcement is due next week by the MPC on whether it will adopt a policy of “forward guidance”, which would help give clues about future moves and helps investors to plan ahead. This will coincide with the release of the Bank’s Quarterly Inflation Report.The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.Setfords Solicitors are a national full service law firm, with business law solicitors in Camberley and across the country.