Rates expected to remain on hold ahead of election

INTEREST rates are expected to be left on hold when Bank of England officials announce their last policy decision before the general election today.

The Bank of England will make its last policy decision today. Picture: Getty

It will mean rates have stayed at the emergency rate of 0.5 per cent for the entire period of the coalition government, despite the upturn in economic fortunes over the last couple of years.

Expectations of a hike have been pushed back into next year with consumer price index (CPI) inflation currently at zero and predicted to turn negative.

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Rate-setters are also likely to be concerned by uncertainty ahead of next month’s poll, as well as the performance of the wider economy despite recent figures showing growth of 2.8 per cent last year, better than previously thought.

But other economic data has been mixed. Purchasing managers’ index (PMI) surveys this week indicated accelerating growth in manufacturing and services sectors last month, but construction losing momentum.

However, official figures for January have been less rosy with all three main sectors – including the powerhouse services sector which represents three-quarters of output – going backwards.