(Source: Money Marketing)
Bank of England bank rate has been held at 0.5 per cent for the
27th month in a row, with quantitive easing held at pound 200bn.
The last rate change was on March 5, 2009, when it was cut from 1
per cent. On the same day, the bank started a pound 75bn QE
programme. The most recent change to the size of the programme, on
November 5, 2009, was a rise of pound 25bn, bringing the total to
pound 200bn.
Minutes from the monetary policy committee's May meeting show a
split over a rate rise, with six members voting in favour of keeping
it the same and three voting for a rise.
Inflation stands at 4.5 per cent, well above the Government's
target of 2 per cent, putting pressure on the bank to raise rates.
Former MPC member Andrew Sentence, who was replaced by Ben
Broadbent in May, warned the bank earlier this month it is in danger
of losing its credibility with the public due to its failure to
tackle inflation.
Legal & General Mortgage Club managing director Ben Thompson
says: "The bank remains in the thick of it, on the one hand needing
to ensure that a sustainable economic recovery is baked in, on the
other hand, ensuring it does not lose its credibility as an
independent rate-setter that is capable of maintaining a controlled
and low inflation economy. It is a tough one, but the recovery has
to come first."
PPR Estates director Nick Hopkinson says: "The Bank of England is
not going to be able to increase interest rates this year, even
though inflation is running away from it. UK Plc is still very weak
and any increase in borrowing costs would almost certainly tip the
scales back into recession."
Copyright: Centaur Communications Ltd. and licensors
(c) 2011 Money Marketing. Provided by ProQuest LLC. All rights Reserved.
A service of YellowBrix, Inc.