Bank leaves rates unchanged
Friday 07 May 1999
However, the Monetary Policy Committee left the way open for future rate cuts. Unusually, it issued a statement with its announcement, saying inflation would probably undershoot the 2.5 per cent target if the pound's exchange rate did not decline.
"In those circumstances, depending on other developments in the economy, there might therefore need to be further easing of interest rates," the statement said.
The pound did fall slightly after the decision. But few experts believe the Bank can do much to influence the exchange rate.
"The MPC is trying to keep a cap on sterling but the upward momentum is probably unstoppable," said Roger Bootle of the consultancy Capital Economics. The improvement in the economy meant there was little scope for further reductions in borrowing costs, he said.
A new survey yesterday revealed a surge in activity in the service sector last month. The expansion was the strongest since June, optimism bounced to a 14-month high, and both costs and prices charged increased for the second month running, according to the monthly purchasing managers' survey.
In its statement the MPC said there were "encouraging signs" of recovery. But the decision to leave rates unchanged was criticised by many in industry who described it as a missed opportunity.
Ian Peters of the British Chambers of Commerce said: "The Bank is dithering while business struggles to build on a fragile recovery."
Roger Lyons, general secretary of the Manufacturing Science and Finance union, said: "We will count every job loss during the summer and will not let the Bank forget its mistake."
Oscar Pistorius trial: Defence's own witness contradicts athlete's version of events
Oscar Pistorius trial: The case against Oscar Pistorius – and why the prosecution claims his story doesn't add up
South Korea ferry: Captain could face criminal investigation as warrant is sought
Peaches Geldof dead: Private funeral for the family and friends of the socialite will take place next week
Shropshire criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
- 1 Poveglia: 'World's most haunted island' up for sale...is anyone brave enough to buy it?
- 2 The Hobbit: There and Back Again set for possible title change
- 3 Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'
- 4 24 people applied for the 'world's toughest job', here are their interviews
- 5 Andre Johnson: Wu-Tang Clan-discovered rapper severed his penis and jumped from LA building
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...