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UK interest rates held at record low of 0.5% | UK interest rates held at record low of 0.5% |
(35 minutes later) | |
The Bank of England has held UK interest rates at a record low of 0.5% for another month. | The Bank of England has held UK interest rates at a record low of 0.5% for another month. |
The size of the Bank's economic stimulus programme - quantitative easing - was also unchanged at £375bn. | The size of the Bank's economic stimulus programme - quantitative easing - was also unchanged at £375bn. |
Rates have been at 0.5% for five years, but as the economy recovers there are expectations of a rise early next year. | Rates have been at 0.5% for five years, but as the economy recovers there are expectations of a rise early next year. |
Last month, minutes of the Bank's interest rate meeting in early August showed that two policymakers voted for a rise. | |
This was the first time in three years that rate-setters on the Bank's nine-member Monetary Policy Committee (MPC) had done so. | This was the first time in three years that rate-setters on the Bank's nine-member Monetary Policy Committee (MPC) had done so. |
Minutes of the latest MPC meeting are due to be published next week. | Minutes of the latest MPC meeting are due to be published next week. |
Debate over the timing of any rate rise has intensified amid publication of more positive economic and consumer data. | Debate over the timing of any rate rise has intensified amid publication of more positive economic and consumer data. |
However, Bank governor Mark Carney has made clear that any rate rises would be small and gradual. | However, Bank governor Mark Carney has made clear that any rate rises would be small and gradual. |
And there are still many economists who feel that the slow growth in wages means that households and businesses would suffer if rates increase too soon. | And there are still many economists who feel that the slow growth in wages means that households and businesses would suffer if rates increase too soon. |
Analysts say a 0.25% rate rise translates into an annual increase of £250 on a typical mortgage. However, pressure to raise rates eased last month with official figures showing that inflation fell to 1.6% in July, while wages fell 0.2%. | |
Nevertheless, some economists still believe a rise could come this year, partly because an increase next year may be to close to the general election in May. | |
"There is typically a preference, if possible, to avoid monetary policy becoming a political football in an election campaign." said Investec chief economist Philip Shaw |