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| Bank of England considers interest rates | Bank of England considers interest rates |
| (40 minutes later) | |
| Bank of England policymakers will meet on Thursday to decide whether to change interest rates or to pump in more money through quantitative easing (QE). | Bank of England policymakers will meet on Thursday to decide whether to change interest rates or to pump in more money through quantitative easing (QE). |
| The majority of economists do not expect the Bank's Monetary Policy Committee (MPC) to alter policy. | The majority of economists do not expect the Bank's Monetary Policy Committee (MPC) to alter policy. |
| Meanwhile, a closely watched survey showed that the UK's services sector grew at a steady pace in May. | Meanwhile, a closely watched survey showed that the UK's services sector grew at a steady pace in May. |
| Analysts had expected a slowdown, which would have led the MPC to be more likely to consider further stimulus. | Analysts had expected a slowdown, which would have led the MPC to be more likely to consider further stimulus. |
| The Markit/CIPS purchasing managers' index came in at 53.3 in May, the same as in April. Any reading above 50 implies growth in the sector. A reading of 52.2 had been forecast. | The Markit/CIPS purchasing managers' index came in at 53.3 in May, the same as in April. Any reading above 50 implies growth in the sector. A reading of 52.2 had been forecast. |
| "By implication I guess that it reduces the prospect of QE at lunchtime, but I don't think it eliminates it by any means," Adam Chester, economist at Lloyds, said. | |
| "The Bank of England will be looking at a host of factors - principally the crisis in the eurozone and the challenging economic environment. It's nothing to get too gung ho about, but it's not as bad as feared." | |
| Euro strains | |
| The UK economy has been shown to be deeper in recession than was thought when the MPC last met a month ago. | The UK economy has been shown to be deeper in recession than was thought when the MPC last met a month ago. |
| But a recent poll of economists by Reuters showed just 25% of those asked thought it would vote for more QE. | But a recent poll of economists by Reuters showed just 25% of those asked thought it would vote for more QE. |
| UK interest rates have been at a record low of 0.5% for more than three years. | UK interest rates have been at a record low of 0.5% for more than three years. |
| Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full | |
| One of the economists polled, Ross Walker, the chief UK economist at RBS, said he thought the probability of a move was more likely than the survey showed, although he still thought the MPC would stick with its current stance. | One of the economists polled, Ross Walker, the chief UK economist at RBS, said he thought the probability of a move was more likely than the survey showed, although he still thought the MPC would stick with its current stance. |
| "Although there's been a sharper-than-expected deterioration in key business surveys recently and confidence has taken a hammering as euro strains become more evident, they [the MPC] could hang on a little longer. | |
| "There is not the pressure there usually is, so if it does get more serious and there's a market clamour to do something they have the chance to move." | "There is not the pressure there usually is, so if it does get more serious and there's a market clamour to do something they have the chance to move." |
| A survey from the British Retail Consortium (BRC) gave a positive picture of the High Street. | A survey from the British Retail Consortium (BRC) gave a positive picture of the High Street. |
| UK retail sales values were up 1.3% on a same-stores basis from May last year, boosted by a burst of fine weather. | UK retail sales values were up 1.3% on a same-stores basis from May last year, boosted by a burst of fine weather. |
| Recently the International Monetary Fund's managing director, Christine Lagarde, said the Bank of England should consider lowering interest rates further to help the UK weather the eurozone debt crisis. | Recently the International Monetary Fund's managing director, Christine Lagarde, said the Bank of England should consider lowering interest rates further to help the UK weather the eurozone debt crisis. |
| The IMF also advocated an expansion of its quantitative easing programme. It has so far agreed to pump a total of £325bn into the economy through QE. | |
| Last week, the Bank's chief economist, Spencer Dale, said the economy was still feeling the benefit from the QE already conducted by the Bank. | Last week, the Bank's chief economist, Spencer Dale, said the economy was still feeling the benefit from the QE already conducted by the Bank. |
| He also predicted the economy would grow this year and said that inflation - which has been falling sharply in recent months and now stands at 3% - needs to come down further. | He also predicted the economy would grow this year and said that inflation - which has been falling sharply in recent months and now stands at 3% - needs to come down further. |