Partly Cloudy

Partly Cloudy

max temp: 19°C

min temp: 16°C

ESTD 1874 Search

UK: MPC leaves monetary policy on hold

12:07 06 December 2012

The Bank of England

The Bank of England

BANK of England policymakers held back from prescribing further emergency medicine to the economy today despite gloomy signs that the recovery is stalling.

shares

The bank’s Monetary Policy Committee (MPC) kept interest rates at their record low of 0.5% and held its quantitative easing (QE) stock at £375billion.

The announcement came as official figures revealed the country’s trade deficit - the gap between goods imported and exported - widened markedly.

It also follows George Osborne’s gloomy Autumn Statement, in which the Chancellor extended the age of austerity against a backdrop of weaker growth and a wider deficit.

Combined with weak surveys on the services, manufacturing and construction sectors, economists still expect the bank to unleash further QE in the new year.

But the economy returned to growth in the third quarter when gross domestic product (GDP) rose 1%, ending the longest double-dip recession since the 1950s.

A second estimate from the Office for National Statistics (ONS) confirmed the performance and revealed the strongest rise in household spending in more than two years in the period.

And there are also doubts among some MPC members over the possible impact, or lack of, of more QE.

In today’s trade figures, the overall deficit in goods and services rose from £2.5 billion to £3.6 billion in October, driven by a 1% fall in exports and 2.5% rise in imports.

The widening in the trade deficit was split roughly evenly between EU and non-EU countries.

Meanwhile, the deficit in goods in the three months to October widened to £28 billion, its highest level since records began.

The Office for Budget Responsibility (OBR) slashed growth forecasts for the next five years yesterday and predicted a borrowing bill some £84 billion higher than its last estimate.

Earlier this month, the minutes of the November MPC meeting appeared to keep open the possibility that the Bank will push the QE button again, should the economy disappoint further.

The underlying picture of the economy remains bleak with a disappointing series of surveys on the services, construction and manufacturing sectors.

Bank governor Sir Mervyn King said the economy could shrink again in the fourth quarter and the OBR agrees.

The MPC also revisited the case for lowering interest rates from 0.5% to 0.25% at its November meeting but decided this was unlikely for the time being.

shares

0 comments

The Lord Lieutenant of Suffolk, Clare, Countess of Euston, presents the Queen's Award for Enterprise to Seafast.

Specialist logistics company Seafast was yesterday presented with the Queen’s Award for Enterprise.

Ipswich Station hanging baskets Shows (L-R) Jackie Rathbone, Abellio Area Ticket Office Manager; Kris Collins, Thompson & Morgan Comms Officer;  Ric Staines ActivGardens Lead Horticulturist and Trainer,

Stunning floral displays are welcoming passengers at Ipswich, Stowmarket and Diss rail stations this summer thanks to a partnership between local charity ActivLives and train operator Abellio Greater Anglia, with help from Ipswich’s own horticultural company Thompson & Morgan.

Carolyn Fairbairn, who is to become director general of the CBI.

A former member of the Number 10 Policy Unit is to become director general of the CBI.

Spending on drinking and eating out remained robut during May, according to the latest Greene King Leisure Spend Tracker report.

Most Britons are planning to holiday in the UK rather than overseas as they continue to monitor their spending carefully, according to a new survey.

Bury St Edmunds coffee company Frank and Earnest is among more than 100 start-up firms to have received support under Menta's Enterprise Engagement Programme.

Bury St Edmunds-based enterprise agency Menta has completed a project to support start-ups during their first year in business.

Lieutenant Aaron Lewis from Rochford, who was killed in Afghanistan in 2008 and in whose memory the Aaron Lewis Foundation has been established to support llocal and military charities through sporting and social endeavours.

The regional arm of David Wilson Homes has raised £17,000 at a golf day, held at Stoke by Nayland, for a charity set up in memory of a soldier.

The Vivo 80 model for which Sudbury-based Specflue won an award at the Home and Hearth Exhibition Awards.

Sudbury-based chimney and flue supplier Specflue has received an award for excellence in the design, innovation and quality of its products.

Shoppers in Bury St Edmunds

More and more people are visiting Bury St Edmunds, a new survey has revealed, placing the town above others of a similar size.

New Anglia LEP chairman Mark Pendlington.

A taskforce is to be established to support businesses and employees in Suffolk and Norfolk who are being affected by the downturn in the oil and gas sector.

Tesco is holding its annual general meeting today.

Tesco today reported “another step in the right direction” despite UK like-for-like sales falling by 1.3% in the first quarter of its new financial year.

Most read

Most commented

Topic pages