No increase in base rate again

For the ninth month in a row the Bank of England has decided to keep the base interest rate on hold, leaving it static at its lowest level in history, which is just 0.5 percent. The decision to keep the base rate so low has come as no surprise to most industry experts given the ongoing problems facing the economy and further threats of job losses. The announcement was made following the December Monetary Policy Committee meeting, which was held last week.

The Bank of England also announced that it would continue with its quantitative easing program to try and revive the economy, having announced last month that the plan was being extended to a total of £200 billion, reflecting an extension of a further £25 billion. Originally the maximum amount earmarked for quantitative easing had been £150 billion. No clue was given as to whether the scheme would be extended further next year.

Many industry experts have slated the quantitative easing programme, stating that it is clear that the plan is not having the desired effect on the economy but the government is continuing to use the programme to try and ease the economic problems. It is thought that when the current programme runs out in January the government will announce whether it plans to extend the scheme further.

In the meantime, an economist from Global Insight, Howard Archer, said that it was likely that the Bank of England would keep the base rate on hold at 0.5 percent until late next year, and even predicted that it could be 2011 before the base rate was increased. He said that fears over unsustainable recovery meant that it was far too soon for the government to think of policy tightening.

Tags: inflation, base rate, quantitative easing, interest rates, Howard Archer, economist, Monetary policy, The Bank of England, Global Insight

QE failing to make necessary impact

Following the recent announcement that a larger amount of money is to be ploughed into the economy through the quantitative easing programme a number of industry groups and officials have come forward to claim that the government is simply throwing good money after bad because the scheme is clearly not working. Read more

Tags: Monetary Policy Committee, Federal Reserve System, quantitative easing, gdp, quantitative easing programme, economist, economics, estimates

Is quantitative easing working?

When the Chancellor of the Exchequer, Alistair Darling, first announced plans for quantitative easing in the UK he said that £75 would be allocated for the scheme with an additional back up of a further £75 billion if necessary. Read more

Tags: economy, bank, thing, industry, Economic policy, quantitative easing, recession, chancellor

Interest rates on hold again

Earlier this month saw the September Monetary Policy Committee meeting took place, and following the monthly meting the Bank of England has announced that the UK base interest rate is to be kept on hold for yet another month, staying at its all time low level of just 0.5 percent. Read more

Tags: easing, interest rates, hike, monetary, quantitative easing, place, bank of england, mortgage rates

Rate of inflation to be held?

It appears probable that the Bank of England’s monetary policy committee (MPC) will decide to leave interest rates on hold following its meeting on January 12th.

However, the rates are likely to be raised to 5.25 per cent next month, meaning more bad news for mortgage holders.

The raise has been predicted by economists for some time and it comes after the cost of borrowing was increased twice towards the end of 2006.

Inflation is currently at 2.7 per cent, the highest it has ever been under this Labour government, and policymakers are concerned about inflationary wage deals as a result of living costs.

“A rate hike this week is not out of the question but given we still know nothing about January wage settlements, I think the bank is more likely to wait,” Alan Castle, economist at Lehman Brothers, told Reuters.

A recent poll carried out by Reuters found that 49 out of 50 economists asked expected rates to remain on hold, while almost 50 per cent thought there would be a rise by March.

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