UK interest rates held

Published 07th Jan 2010

The Bank of England held interest rates at a record low today as policymakers treated recent signs of a tentative recovery with caution...

The Monetary Policy Committee (MPC) left borrowing costs unchanged at 0.5% for the 10th month in a row and made no move on its £200 billion efforts to boost the money supply.

Stuart Law, Chief Executive of Assetz, says, "It is no surprise that the Bank of England has decided to keep interest rates at the all-time low of 0.5 per cent this month. However, there remains a possibility that there may be some movement on interest rates this year, but probably not until well after September at the very earliest, if at all this year. If rates do rise this year, we expect the end of the year base rate to be no higher than two per cent.

"Rates are likely to remain low for a considerable period of time in order to allow the economy to start to grow again significantly. This may well lead to a period of excess inflation above the current target of two per cent but there is unlikely to be any intervention by the Bank of England straight away.

"Growth in the economy will lead to increased taxes, and this will enable repayment of the National debt, so there is a plus side to the Bank of England driving the economy forwards in another credit driven boom cycle and this is why we think base rate policy will remain cautious in the medium term at least," he added.

Source: ' TMC '

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