Bank of England leaves interest rates on hold

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The Bank of England’s monetary policy committee (MPC) left interest rates on hold at 0.5 per cent today and kept its quantitive easing (QE) scheme unchanged at £375 billion.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The decision to hold off from further stimulative action at this stage was widely expected.

“An interest rate cut is clearly off the agenda while it is evident that several MPC members feel that now is not the time for more quantitative easing.”

Stephen Boyle, head of group economics at Royal Bank of Scotland, said: “Not even a gloomier economic outlook from the Office for Budget Responsibility (OBR) could tempt the MPC to provide some early Christmas cheer for the UK economy. But this wasn’t a surprise.

“Last month the MPC stated that they judge it unlikely they will cut the bank rate ‘in the foreseeable future’. And with the UK government’s decision to transfer the ‘profits’ from Bank’s QE programme – which has a similar loosening effect – there is, in effect, already a bit more stimulus splashing around the system.”

But some economists think the MPC may make a move in the new year.

Anna Leach, the CBI’s head of economic analysis, said: “If evidence shows that conditions have deteriorated further this may prompt a shift in policy in the new year.”

David Kern, chief economist at the British Chambers of Commerce, added: “We believe a further round of QE should only be considered if new threats emerge to the stability of the UK banking system. An increase would only add to longer-term risks of bubbles, financial distortions, and higher inflation, with little benefit to the UK economy.”