THE Bank of England’s decision to hold interest rates at record lows have been welcomed by senior North East business figures.
Its Monetary Policy Committee (MPC) voted to hold rates at 0.5% and left its £200billion programme to boost the money supply unchanged, as policymakers weighed up the impact of a eurozone bailout and a hung Parliament.
The widely-expected decision came as European leaders agreed to prop up the euro and prevent Greece’s sovereign debt crisis from spreading, while talks over a possible coalition continue following last week’s indecisive election.
Despite worries over inflation, the current political and economic uncertainty will have reinforced the MPC’s “no change“ stance with the UK making a fragile recovery from recession.
Rate-setters have failed to budge policy since November and are unlikely to move until repair plans for the UK’s public finances have been set out by a new government and the economy shows signs of stronger growth.
EEF region director Alan Hall, said: “Keeping monetary policy stable was the only call this month as, notwithstanding the indecisive election result, the MPC will want to get a clear sense of plans to repair the public finances before it moves on QE and interest rates. “However, with inflation stubbornly above target the committee will need to keep a close eye on inflation expectations and potential wage pressures over the coming months.”
Sarah Green, regional director, CBI North East, said: “The Bank of England's decision to leave interest rates and its quantitative easing policy unchanged were expected, as the MPC will be waiting to see how the delicate economic situation develops.
“The news suggests that the economy is improving, but we still believe that growth this year will be modest."
May 11 2010 by Peter McCusker, The Journal
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