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Freeze on interest rates goes on | Freeze on interest rates goes on |
(about 2 hours later) | |
UK interest rates have been kept unchanged at 0.5% following the Bank of England's latest meeting. | UK interest rates have been kept unchanged at 0.5% following the Bank of England's latest meeting. |
The cost of borrowing has been at a record low since March 2009 and economists do not expect the central bank to raise rates in the near term. | The cost of borrowing has been at a record low since March 2009 and economists do not expect the central bank to raise rates in the near term. |
The Bank's Monetary Policy Committee (MPC) also maintained the quantitative easing (QE), or asset buying, programme at £200bn. | The Bank's Monetary Policy Committee (MPC) also maintained the quantitative easing (QE), or asset buying, programme at £200bn. |
The UK is thought to have exited recession in the last quarter of 2009. | The UK is thought to have exited recession in the last quarter of 2009. |
The MPC said it expected its QE programme to take another month to complete and that the scale of the programme would be kept under review. | The MPC said it expected its QE programme to take another month to complete and that the scale of the programme would be kept under review. |
'Challenging year' | 'Challenging year' |
Roger Bootle, economic adviser to consultants Deloitte, said the MPC's latest meeting was a "holding operation", as the committee is in "wait-and-see mode" until its next inflation report in February. | Roger Bootle, economic adviser to consultants Deloitte, said the MPC's latest meeting was a "holding operation", as the committee is in "wait-and-see mode" until its next inflation report in February. |
There's a much bigger problem with explaining the MPC's actions, which is that even if they all agree that a pause is the right way forward, they won't necessarily agree on why Stephanie Flanders, BBC economics editor | |
Philip Shaw, chief economist at Investec, saw "no surprises" in the MPC's announcement. | Philip Shaw, chief economist at Investec, saw "no surprises" in the MPC's announcement. |
"The environment for the MPC now becomes much more challenging. Firstly it has to decide whether to provide more QE next month - it is possible, but we doubt that it will," he said. | "The environment for the MPC now becomes much more challenging. Firstly it has to decide whether to provide more QE next month - it is possible, but we doubt that it will," he said. |
"Beyond that the issue will be whether to tighten and if so, when and by how much. It is going to be a very challenging year to be a policy maker." | "Beyond that the issue will be whether to tighten and if so, when and by how much. It is going to be a very challenging year to be a policy maker." |
Manufacturers said they supported the Bank's decision. | Manufacturers said they supported the Bank's decision. |
"The recovery is now underway, but its strength remains in doubt," said Lee Hopley, chief economist of the manufacturers' organisation, the EEF. | "The recovery is now underway, but its strength remains in doubt," said Lee Hopley, chief economist of the manufacturers' organisation, the EEF. |
"There are a number of potential pitfalls even as the UK economy starts growing again, including cautious consumers, questions over the public finances and a still-fragile banking system." | "There are a number of potential pitfalls even as the UK economy starts growing again, including cautious consumers, questions over the public finances and a still-fragile banking system." |