No change on interest rates despite UK growth worries
Friday 07 September 2012
The Bank of England interest rate was left on hold at 0.5 per cent yesterday, despite more dire predictions for UK economic growth.
It suggests the Bank's Monetary Policy Committee is waiting to see how its latest quantitative easing programme, announced in July and barely halfway to its £50bn target, will boost economic activity.
"The economy is still finding life very difficult, and further, stimulative action remains highly likely in the fourth quarter," Howard Archer, at IHS Global Insight said.
As if policymakers needed any further reminding of the dire state of UK plc, the Organisation for Economic Co-operation and Development said the British economy would shrink by 0.7 per cent in 2012. In May, the same body said it would actually grow by 0.5 per cent.
Elsewhere, the European Central Bank chose to ape the Bank of England's wait and see approach by leaving its key interest rate on hold at 0.75 per cent. But apart from that the ECB was all action, with its president Mario Draghi unveiling his bond-buying scheme meant to support the finances of the eurozone's most debt-ridden governments, particularly Spain and Italy.
Unlimited resources will be put into the scheme which will see short-term bonds bought by the ECB, but strict conditions applied to nations needing help.
Mr Draghi said this will provide a "fully effective backstop" for the eurozone. In response, markets across Europe rose, with Germany's Dax and France's benchmark CAC40 up about 3 per cent and London's FTSE 100 up DAX up 2.9 per cent to 7,167, the CAC 40 2.1 per cent higher at 5,777.
- 1 What, let gays get married? We must be bonkers
- 2 Rocky Horror star Tim Curry 'suffers major stroke'
- 3 Exclusive: How MI5 blackmails British Muslims
- 4 EDL marches on Newcastle as attacks on Muslims increase tenfold in the wake of Woolwich machete attack which killed Drummer Lee Rigby
- 5 Farewell, Shameless. Your heirs have work to do
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.