Sunshine and Showers

Sunshine and Showers

max temp: 14°C

min temp: 10°C

ESTD 1874 Search

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.

Search hundreds of local jobs at Jobs24

0 comments

Dr Donald Gilbert of ProSynth receiving the company's Queen's Award fom Clare, Countess of Euston, Lord Lieutenant of Suffolk.

A Suffolk company which provides complex chemistry services for research and development work at some of the world’s leading pharmaceutical companies was yesterday presented with the Queen’s Award for Enterprise.

The East of England Co-op has put in a planning application to demolish the building as part of a regeneration project.

The East of England Co-op has announced plans to demolish an unused building in Ipswich which will pave the way for more regeneration.

From left, apprentices Bethany Brame, Lydia Lloyd-Potts and  Josephine Brady, Greene King chief executive Rooney Anand, Robert Halfon MP and Jo Churchill MP.

Skills minister Robert Halfon MP has praised the commitment of Bury St Edmunds-based pubs and brewing group Greene King to apprenticeships.

Greenpeace has published a list of the UK's top 100 recipients of European Union farming subsidies.

A number of East Anglian estates and farm businesses are among those receiving hundreds of thousands of pounds under the European Union’s Common Agri-cultural Policy (CAP), according to analysis by environmental group Greenpeace.

Alton Towers in Staffordshire, whose owner, Merlin Entertainments, says it has

Alton Towers owner Merlin Entertainments said today it had “learned every lesson” from last year’s Smiler rollercoaster crash as it revealed that visitor numbers are still being affected.

HOT JOBS

Show Job Lists

Most read

Most commented

Topic pages

Streetlife

Newsletter Sign Up

Sign up to the following newsletters:

MyDate24 MyPhotos24