Partly Cloudy

Partly Cloudy

max temp: 18°C

min temp: 15°C

ESTD 1874 Search

The pigs have arrived. See the latest

Pigs Gone Wild

news here.

UK: Bank of England leaves monetary policy on hold

12:37 10 January 2013

The Bank of England in the City of London

The Bank of England in the City of London

BANK of England policymakers kept interest rates at emergency lows and held off from further economy-boosting measures today despite fears of a triple-dip recession.

The bank’s Monetary Policy Committee (MPC) remained in “wait and see” mode again this month, holding rates at their record low of 0.5% and maintaining its quantitative easing (QE) programme at £375 billion.

Its decision comes amid mounting concerns that Britain’s economy slipped back into the red in the final quarter of 2012 following figures suggesting the dominant services sector contracted in December for the first time in two years.

The MPC is expected to hold off from any further QE action until the picture becomes clearer, although some economists believe dire economic news could see it push the button in the first half of the year.

Savers are also unlikely to be offered any respite from painfully low interest rates for the foreseeable future, with experts at investment banking giant Citi recently saying they believed rates would be held at historic lows until mid 2017.

Anna Leach, head of economic analysis at the CBI business group, said: “A change in monetary policy was unlikely this month, given that the UK economy continues to send out mixed signals.

“We’re not expecting any change in monetary policy over the next few months, unless compelling evidence of a renewed downturn emerges.”

The bank has held rates at 0.5% since March 2009 as the economy has struggled to recover from the financial crisis.

A gloomy report from Markit economists recently estimated UK gross domestic product (GDP) contracted by 0.2% in the final three months of 2012 in a marked reversal of the 0.9% recovery the previous three months.

With a very real risk that the first quarter of 2013 might not prove much better, the economy could be heading for two consecutive quarters of declining output which would mark an unprecedented triple-dip recession.

But there has been a glimmer of hope on the global economic outlook after America’s recent fiscal cliff deal to avoid automatic tax hikes and spending cuts, a recent easing in eurozone debt tensions and with cheer today after data showed a far stronger-than-expected trade performance by China last month.

The bank will also have to weigh up the encouraging early results of the Funding for Lending scheme to boost the flow of credit.

Mortgage approvals to home buyers climbed to a 10-month high in November, according to the Bank, while its recent credit conditions report showed that lenders expect to “significantly” increase the availability of finance to households and borrowers this year.

Inflation might continue to cause a headache for policymakers, however, after the consumer prices index leapt to 2.7% from 2.2% in September and amid signs it will pass 3% in the next few months as energy bill hikes take effect.

0 comments

Metin Ozer, from Mr Chippys Fish and Seafood Restaurant, Simone McLean, from S&S Caribbean Cafe, Sharalyne Monk, from Zebra News, Jessica Schomberg, from Jes, Izabela Serwin, from Cardamon Cafe, and April Moodie, from Music Warehouse, are angry how a trade is being affected due to a portion of St John's Street in Colchester is blocked due to sewer repairs.

Businesses say they have been left counting the cost and struggling for survival after a collapsed sewer has closed a Colchester town centre road for six weeks.

Bernard Matthews is up for sale. Image: Bernard Matthews

Union Unite said it was a “worrying time” for Bernard Matthews employees, who were awaiting news of a possible sale of the company.

The main terminal building at Stansted Airport

The owner of Stansted Airport has called on the Government to prioritise schemes to make best use of the UK’s existing airport capacity, after a decision on building a new runway in the South-East was again postponed.

Angela Saunders who was refused alcohol in Tescos beacause her 15 year old daughter was with her.

A single mother has vowed to boycott a Suffolk supermarket after being “humiliated” by staff refusing to serve her alcohol because she was with her teenage daughter.

Jenny Hill, systerms and administration manager at TA Hotel Collection, receives her Managing Director's Award from Grahame Tinnion, right, manager director of TA Hotel Collection, and Simon turner of award spnsor Sumaridge Estate Wines.

Suffolk-based hotels group TA Hotel Collection has announced the winners of its 2016 team awards during a celebratory evening held at its Thorpeness Country Club venue near Aldeburgh.

HOT JOBS

Show Job Lists

Most read

Most commented

Topic pages

Streetlife

Newsletter Sign Up

Sign up to the following newsletters:

Great British Life

Great British Life
MyDate24 MyPhotos24