Interest rate held at 0.5% despite fears over economy

Published on Thursday 10 November 2011 14:09

THE Bank of England resisted further emergency action today despite fears that the economy will go into reverse by the end of the year.

The Bank’s Monetary Policy Committee (MPC) kept interest rates at their record lows of 0.5 per cent and maintained its quantitative easing programme at £275 billion after October’s shock increase.

The MPC pumped an extra £75 billion into the economy last month amid signs that the recovery was faltering and while the picture in the UK and eurozone has worsened, economists do not expect further action until early next year.

The Bank unanimously voted for the QE boost amid fears that growth in the UK will grind to a halt by the end of the year, while Bank governor Sir Mervyn King warned that the UK could be facing “the most serious financial crisis” it has ever seen.

Today’s decision came as the European Commission, the executive arm of the European Union, slashed its growth forecast for the UK this year to 0.7 per cent from 1.1 per cent but said there were better prospects for exports.

The UK’s gross domestic product (GDP) in the third quarter grew at a better-than-expected 0.5%, but economists have warned that the figure overstated the underlying health of the economy.

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ssxtrdty

Friday, November 11, 2011 at 04:25 AM

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