The base rate of interest has been held at 0.5 per cent and there will be no immediate increase in the Bank of England’s quantitative easing (QE) asset purchase programme, after the latest meeting of the Bank’s Monetary Policy Committee (MPC).
Earlier this week, the chief economist at the British Chambers of Commerce, David Kern, urged the MPC to resist pressures to add to its QE programme. Mr Kern warned that “adding to QE would provide only marginal benefits for the UK economy, while increasing risks of higher inflation and the further weakening of sterling.”
The last QE increase was a £50 billion injection in July of last year, bringing the programme’s total to £375 billion. Interest rates remain unchanged since the 0.5 per cent reduction in March 2009.
Responding to the MPC’s decision on Thursday, Stephen Gifford, director of economics at the Confederation of British Industry, said:
“Given first quarter GDP came in above the Bank’s forecast, we expected the MPC to keep the policy stance unchanged this month. Recent survey data also suggest that modest growth has continued into the second quarter. At the same time, credit conditions should improve further this year on the back of the extension of the Funding for Lending Scheme.”