Bank of England confirms interest rates and quantitative easing to remain unchanged in show of confidence in economy

Policy-makers had already pledged to keep rates at their record low until the unemployment rate falls to 7 per cent

UK interest rates have been held at their record low level of 0.5 per cent and no more money needs to be injected into the economy, the Bank of England has decided.

In signs which indicate faith in a strong economic recovery, the monthly meeting of the Bank’s Monetary Policy Committee concluded with two pieces of good news, and no obvious concerns that growth will falter.

Officials from the rate-setting body have now shot off to attend the G20 meeting in Washington, having renewed their pledge to hold interest rates until unemployment falls to 7 per cent.

Spirits seems to be high, with some experts estimating economic growth in the third quarter of 2013 will reach a full 1 per cent, a big improvement on the 0.7 per cent of the previous three month period.

The Bank of England is also happy to stick to plans for a total injection of no more than £375 billion of quantitative easing – despite the fact that, until recently, some members of the policy board had said more QE was sure to be needed.

Inevitably, though, it wasn’t all good news. In what one analyst described as a “reality check” for the UK economy, official data released this week for the manufacturing and trade sectors showed disappointing results.

According to the Office for National Statistics (ONS), output from British factories fell unexpectedly in August, sending overall industrial production down 1.1 per cent in its biggest monthly fall for nearly a year.

The ONS added that the UK's trade deficit remained stubbornly high at £3.3 billion in August, down only marginally on the £3.4 billion recorded in July.

The National Institute of Economic and Social Research (NIESR), a think-tank, released its latest forecast yesterday, giving a more muted prediction for 0.8 per cent growth in the third quarter.

The figures came as a setback after last week's economic cheer, when the closely watched Markit/CIPS purchasing managers' index (PMI) showed the dominant services sector grew at its fastest pace for 16 years in the third quarter.

House price data from Halifax also showed a 6.2 per cent year-on-year increase in September in the biggest hike since 2010 as the Government's Help to Buy initiative continues to send would-be buyers flocking into the market.

Economists said the disappointing manufacturing figures confirm that the recovery remains volatile, but believe it remains on the right track and should continue to gather pace.

The strength of the recovery in recent months has increased pressure on the Bank's rates pledge, although America's ongoing partial government shutdown and its decision to delay QE tapering has slightly pushed back the market's expectation for the first UK rate hike.

Despite this, the City is still expecting the Bank to raise historically low interest rates by early 2015 and remains unconvinced over the Bank's prediction that unemployment will not fall to the 7 per cent threshold until mid to late 2016.

Additional reporting by PA

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all