Bank of England holds interest rates at 0.5%

 

The Bank of England resisted unveiling more emergency measures to support the UK recovery today.

The Bank's Monetary Policy Committee (MPC) maintained interest rates at a record low of 0.5% and held its quantitative easing (QE) stock at £375 billion.

The no-change decision comes after official figures revealed the economy grew at a bigger-than-expected 1% between July and September, ending the double-dip recession.

The move is likely to fuel expectations that the Bank will no longer resort to QE as a policy tool following hints from both its governor and deputy governor, Sir Mervyn King and Paul Tucker, that its impact is reaching its limit.

And minutes from the October meeting of the Bank's Monetary Policy Committee (MPC) suggested members were divided over the benefits of pumping more emergency cash into the economy.

The documents also said some members had questioned the impact that further QE, also known as money printing, would have on the broader economy.

The decision is likely to have been a close call for the nine-strong panel after a recent run of weak purchasing managers surveys for the services, manufacturing and construction sectors in October.

The surveys gave credence to expert warnings that the underlying health of the economy is much bleaker than the 1% growth in the third quarter suggests.

An encouraging start to the Bank's Funding for Lending scheme may have also tipped the balance away from further asset purchases this month with 30 groups, including the five largest banks in the UK, signing up to the £80 billion initiative.

Funding costs have dropped one percentage point, the Bank said, while the number of loans approved for house purchase rose by 2,103 to 50,024 in September.

Consumer prices index inflation has also eased back significantly and, at 2.2% in September, is close to the Government's 2% target.

Vicky Redwood, chief UK economist at Capital Economics, said: "The MPC's decision to leave policy on hold today would not have been an easy one and the vote could have been quite close.

"We think that more policy stimulus will be required in the coming months - the question is whether the Committee feels it has the tools to deliver it."

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash