Quantitative easing, which injects money into the economy in a bid to revive it, was first introduced in March.
Mark Thompson, senior dealer at Moneycorp, says: "The interest rate freeze is no surprise. Interest rates are on hold indefinitely with the Bank of England having decided against further expansion of quantitative easing measures for the time being at least. The pound remains calm and is actually up slightly on yesterday’s close. With the UK still deep in recession, lending to households remains subdued and consumers remain unsure what lies ahead. The MPC must decide if it has done enough. Markets are unsure, and this may just be a minor pause for breath before the Bank writes to the Chancellor to print more money." Ian McCafferty, CBI chief economic adviser, notes: "With the economy and credit conditions still very weak, the bank’s quantitative easing programme has further to run. That, rather than interest rates, is the MPC’s main concern. "After only five months, it is still too early to determine the effects on the wider economy. So, a further extension through the autumn is needed, and clear communication of the bank’s intentions throughout will be critical in order to prepare the markets."
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