Sunday 17 November 2019

BoE leaves rates unchanged for record six years

The Bank of England has left its rates unchanged
The Bank of England has left its rates unchanged

Andy Bruce

Britain's central bank, the Bank of England, marked the sixth anniversary of the introduction of its lowest ever interest rate by standing pat once again yesterday, but an improving economy suggests rates are likely to rise at some point over the next 12 months.

While no economist polled by Reuters expects the Monetary Policy Committee to raise rates before a May 7 general election, given Britain's record low inflation, there are signs that policymakers believe a rate hike could come sooner than markets believe.

The bank said yesterday it was keeping rates at 0.5pc, their level since the depths of the financial crisis.

Minutes of the meeting, explaining the debate among rate-setters, are due to be published in just under two weeks' time.

Business surveys this week showed Britain's economy started 2015 strongly, and wage data in the next few months could provide some policymakers with enough evidence that it can start to be weaned off low borrowing costs.

"The MPC's decision to stand pat today ... looks set to repeated over the next few months while inflation hovers near zero," said Samuel Tombs, economist at Capital Economics.

"But by the summer, it should be clear that the UK's deflation is neither pernicious nor long-lasting," he said.

Irish Independent

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