Interest Rates

Interest Rates, It has been almost two years since the Bank of England (BoE) cut interest rates to a record low of 0.5pc. Following the decision in March 2009, the BoE’s Monetary Policy Committee decided to maintain the status quo, despite growing concerns about rising inflation and the credibility of the MPC.But the general consensus among economists is similar to the view of MBM business, and none of the 63 polled by Reuters had expected a rate rise this month. Three-quarters of the 49 economists who responded said the rate increase by the end of 2011, with forecasts a rise in median lying around November. (UKPA) – The Bank of England kept interest rates at their peak of 0.5% despite warnings that inflation could rise to 5% in coming months. The vote by the committee of nine forts of the Bank is likely to have been finely balanced after the pressure of higher rates intensified in recent weeks. Makers Updated on borrowing rates in March 2009, but the measure of CPI inflation rose to 3.7% in December – well above the Bank’s medium-term objective of 2% – and the governor Mervyn King has warned it could reach 5%.

Business leaders applauded the decision of the Bank and said that any change in borrowing costs would jeopardize recovery-faltering UK, especially after the economic output contracted by 0.5% the last quarter of 2010.

With 68% of mortgages are variable rate, many homeowners who continue to enjoy low levels of reimbursement will welcome the decision.

The Bank’s Monetary Policy Committee (MPC) also voted to keep its quantitative easing program, or printing of money unchanged at £ 200 000 000 000 to promote growth.

Lee Hopley, economist at the organization EEF manufacturing employers, “said a rate hike would have done little to alter the path of inflation in the short term, which is driven by commodity prices and taxes.

She said: “The contraction in the economy in the last months of the year 2010 could well have been a blip, but the biggest risk now appears to be growth, the Bank should continue to be maintained until the picture becomes clearer and the economy is firmly back on track upwards. ”

The business lobby group CBI said he expected rates to raise in the second quarter of 2011, while inflationary pressures are intensifying.

CBI chief economic adviser Ian McCafferty said: “This announcement to keep the same rate is not a surprise, but with more MPC members showing their concerns about inflationary pressures, the Bank is moving its position. ”

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