The Bank of England has kept its base rate at a record low of 0.5pc for the 44th consecutive month and decided against extending its quantitative easing programme.
The Bank's Monetary Policy Committee (MPC) kept interest rates at their record low despite the economy returning to growth in the third quarter, when GDP expanded by 1pc and brought the UK's double-dip recession to an end.
It also held off on extending the £375bn quantitative easing programme, although the vote is expected to have been close. Several MPC members have voiced concerns over the inflationary effects of printing money and questioned the efficacy of the plan.
Central bankers also hope that the Funding for Lending scheme, which offers cheap credit to banks in the hope that they will begin lending more freely, will begin to have a positive effect in coming months.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "We suspect that the Bank of England’s decision to hold off from further stimulus at the November MPC meeting may very well have followed a very close vote within the committee.
"We are doubtful that the decision marks the end of quantitative easing given that recovery currently looks fragile, feeble and far from guaranteed. Indeed we expect another, and likely final, £50bn of QE to be enacted in the early months of 2013."
Meanwhile, we remain firmly of the view that interest rates will not go below 0.5pc. However, we do not expect any increase in interest rates for at least another two years."The Bank of England will release the minutes of the MPC meeting on November 21.
Earlier this week Andrew Sentance, PricewaterhouseCoopers’ senior economic adviser and a member of the MPC until earlier this year, set out his opposition to another round of quantitative easing and said rates needed to rise to 3pc by 2015 to reduce the risk of “distorting” the economy.
His comments came as the European Commission warned that Chancellor George Osborne is likely to miss his debt reduction target when the Office for Budget Responsibility updates its forecasts next month.
“It appears that the Government may miss its target of having debt fall as a share of GDP by 2015-16 if no new measures are introduced in the Autumn Statement on December 5,” the EC said in its economic update.
telegraph.co.uk
The Bank's Monetary Policy Committee (MPC) kept interest rates at their record low despite the economy returning to growth in the third quarter, when GDP expanded by 1pc and brought the UK's double-dip recession to an end.
It also held off on extending the £375bn quantitative easing programme, although the vote is expected to have been close. Several MPC members have voiced concerns over the inflationary effects of printing money and questioned the efficacy of the plan.
Central bankers also hope that the Funding for Lending scheme, which offers cheap credit to banks in the hope that they will begin lending more freely, will begin to have a positive effect in coming months.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "We suspect that the Bank of England’s decision to hold off from further stimulus at the November MPC meeting may very well have followed a very close vote within the committee.
"We are doubtful that the decision marks the end of quantitative easing given that recovery currently looks fragile, feeble and far from guaranteed. Indeed we expect another, and likely final, £50bn of QE to be enacted in the early months of 2013."
Meanwhile, we remain firmly of the view that interest rates will not go below 0.5pc. However, we do not expect any increase in interest rates for at least another two years."The Bank of England will release the minutes of the MPC meeting on November 21.
Earlier this week Andrew Sentance, PricewaterhouseCoopers’ senior economic adviser and a member of the MPC until earlier this year, set out his opposition to another round of quantitative easing and said rates needed to rise to 3pc by 2015 to reduce the risk of “distorting” the economy.
His comments came as the European Commission warned that Chancellor George Osborne is likely to miss his debt reduction target when the Office for Budget Responsibility updates its forecasts next month.
“It appears that the Government may miss its target of having debt fall as a share of GDP by 2015-16 if no new measures are introduced in the Autumn Statement on December 5,” the EC said in its economic update.
telegraph.co.uk
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