The Bank of England confirmed today that it will hold interest rates at the record low of 0.5% for another month.
With the size of the Bank’s bond-buying stimulus programme also unchanged at £375 billion, economists expect that interest rates will remain the same until the first half of next year.
Changes to QE and interest rates weren’t expected despite the continued signs the UK economy is growing.
Philip Shaw, chief economist of investment bank, Investec, said:
“For now, with the economy growing respectably but not roaring away, we see it likelier than not that the MPC will avoid tightening policy this year, especially with inflation expected to remain below target over the medium term.”
Falling inflation rates have lessened the pressure on the Bank’s Monetary Policy Committee to raise interest rates. The UK’s inflation rate fell to 1.7% last month, which was a four-year low and below the Bank’s target of 2%.
Howard Archer, chief UK and European economist at IHS Global Insight, said:
“The second quarter of 2015 currently looks the prime candidate for when the Bank of England starts to inch interest rates up – given both the inflation forecasts contained in the Bank of England’s February Quarterly Inflation Report and the general drift of comments made by MPC members in recent weeks.”
Photo by Natalie Johnson