The Bank of England has held UK interest rates at a record low of 0.5% for another month.
It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.
The Bank's Monetary Policy Committee has held rates at 0.5% since March 2009 in a bid to help economic recovery. Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news. This week, surveys indicated a slowdown in the UK services sector and construction industry.
The Chancellor, George Osborne, has also warned that the UK will not escape the slowdown in the eurozone. However, on Thursday figures from the Office for National Statistics said industrial output rose more than expected in September, boosted by a major North Sea oil field coming back on stream and a rebound in car production.
The ONS said factory output rose 0.6% in September from August. The return of production at the major Buzzard offshore field in the North Sea and at other installations was behind a 5.2% jump in extraction of crude oil and natural gas.
The Bank of England has said it wants to be sure growth is on a firmer footing, and that slack in the labour market is reducing, before it raises interest rates.
First rise?
Howard Archer, chief UK & European economist at IHS Global Insight, said it was no surprise rates were held.
"Indeed, it would now be a surprise if the Bank of England raised interest rates until well into 2015," he said. "The likelihood of a near-term interest rate hike from the Bank of England has seemingly receded substantially recently."
Weak inflation, slow wage growth, and troubles in the eurozone have prompted some Bank officials to indicate that rates will not rise any time soon. The Bank is due to publish new economic forecasts next week, which will be pored over by analysts looking for clues on when rates may rise.
A cut in the Bank's inflation and growth expectations could lead to economists pushing back forecasts for a rise until around mid-2015 at the earliest - which would be after the general election.
Alan Clarke, an economist at Scotiabank, said that if the Bank cut its inflation forecast, "then the market will probably conclude that the first rate hike is not likely until late 2015".
The British Chambers of Commerce said its members would be "relieved that an early rate rise appears to be off the agenda". Chief economist David Kern said the near-term economic picture was one of slowdown.
"Given this background, it is clear that keeping the economic recovery on track must remain a priority and risks of a steady slowdown must be countered. "As well as providing clarity that interest rates will remain low well into 2015, the MPC must make renewed efforts to boost bank lending to growing businesses," Mr Kern said.
bbc.com
The Bank's Monetary Policy Committee has held rates at 0.5% since March 2009 in a bid to help economic recovery. Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news. This week, surveys indicated a slowdown in the UK services sector and construction industry.
The Chancellor, George Osborne, has also warned that the UK will not escape the slowdown in the eurozone. However, on Thursday figures from the Office for National Statistics said industrial output rose more than expected in September, boosted by a major North Sea oil field coming back on stream and a rebound in car production.
The ONS said factory output rose 0.6% in September from August. The return of production at the major Buzzard offshore field in the North Sea and at other installations was behind a 5.2% jump in extraction of crude oil and natural gas.
The Bank of England has said it wants to be sure growth is on a firmer footing, and that slack in the labour market is reducing, before it raises interest rates.
First rise?
Howard Archer, chief UK & European economist at IHS Global Insight, said it was no surprise rates were held.
"Indeed, it would now be a surprise if the Bank of England raised interest rates until well into 2015," he said. "The likelihood of a near-term interest rate hike from the Bank of England has seemingly receded substantially recently."
Weak inflation, slow wage growth, and troubles in the eurozone have prompted some Bank officials to indicate that rates will not rise any time soon. The Bank is due to publish new economic forecasts next week, which will be pored over by analysts looking for clues on when rates may rise.
A cut in the Bank's inflation and growth expectations could lead to economists pushing back forecasts for a rise until around mid-2015 at the earliest - which would be after the general election.
Alan Clarke, an economist at Scotiabank, said that if the Bank cut its inflation forecast, "then the market will probably conclude that the first rate hike is not likely until late 2015".
The British Chambers of Commerce said its members would be "relieved that an early rate rise appears to be off the agenda". Chief economist David Kern said the near-term economic picture was one of slowdown.
"Given this background, it is clear that keeping the economic recovery on track must remain a priority and risks of a steady slowdown must be countered. "As well as providing clarity that interest rates will remain low well into 2015, the MPC must make renewed efforts to boost bank lending to growing businesses," Mr Kern said.
bbc.com
No comments:
Post a Comment