Bank of England keeps interest rates on hold
8th July 2010
The Bank of England has once again decided to keep the base interest rate on hold at just 0.5 percent. This is the lowest that the base rate has been in the history of the central bank, which spans over three centuries. The base rate has now been at this record low for well over a year, having fallen to 0.5 percent in March of last year, where it has remained ever since.
This marks the sixteenth month in a row that the base rate has been just 0.5 percent, which will come as good news for the many homeowners and borrowers that may have been panicking about their repayments rising along with the base interest rate.
In addition to keeping the base interest rate on hold the Monetary Policy Committee has also announced that it has decided not to plough any more money into the economy through the quantitative easing programme that was brought in by the former Labour government initially.
Whilst many industry officials had been expecting the decision that was announced today many have been calling for an increase in the base interest rate in order to try and curb inflation. Andrew Sentance, one MPC member, called for an increase in the base rate of 0.25 percent, which would have taken the base rate to 0.75 percent, in June of this year. He was the first MPC member to call for a base rate increase since August of 2008.
The manufacturers' organisation, the EEF, has said that the news was expected, and that it was likely that for the foreseeable future the base rate would remain at its all time low. The British Chambers of Commerce said that it supported the decision of the MPC and the central bank to keep rates on hold for now.
One mortgage broker said that he did not really expect any increase in the base rate until next year, and when interest rates did start to increase the rise would be slow and gradual. Officials have said that whilst the static base rate will be welcomed by many consumers and businesses the increase in VAT, which comes into play next year, will pile on the pressure.
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