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Interest rates held again

The Bank of England kept the base rate steady at 0.5% today for the fifth successive month and increased its quantative easing programme.

And it said it would pump an additional £50bn into the economy through its quantitative easing programme.

The Bank has so far earmarked £125bn which has been used to buy assets such as government securities and corporate bonds.

It was understood to be reluctant to increase debt if the economy is showing signs of recovery.

Sarah Green, Regional Director, CBI North East said: “This must have been a finely balanced decision. The economic outlook has brightened a little in recent weeks, which might have argued for a pause in QE.

“The Monetary Policy Committee has been crunching the numbers for its quarterly Inflation Report, and must have concluded that a further policy stimulus was necessary. No doubt the Governor will reveal all when the Inflation Report is published next week.”

Martyn Pellew, president of the North East Chamber of Commerce (NECC), said: “This extra injection of liquidity is welcome. We hope this will give the extra impetus needed to return the UK economy to growth.”

Anthony Josephs, partner at RMT Accountants and Business Advisors, said: “The move today by the Bank of England to hold the interest rate at 0.5 per cent will be well received by North East businesses, but the most critical issue is to improve the availability of funding to owner managed business.

“It will be interesting to see how the Government continues to respond to the current economic climate, for instance if VAT goes back up to 17.5 per cent at the end of the year. Time will tell just how big an impact the current interest rate will have in improving business confidence and the current economic climate in the longer term.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .