Interest Rates Held At Record Low

• News
• Published: 04 Mar 2010 in Money and Mortgages

Interest rate-setters have resisted the temptation to pump fresh aid into the economy, deciding against any change to the ongoing stimulus package on Thursday

The Monetary Policy Committee (MPC) left rates and the £200 billion quantitative easing (QE) programme unchanged, with many suggesting a year of record-low 0.5% interest rates had informed the decision.

The "wait and see" stance comes a week after new figures gave a mixed forecast for the future of the economy, suggesting, on the one hand, that at 0.3% growth for the last quarter of 2009 it was recovering faster than many had expected, but also revealing the recession to be deeper than first thought - at a record 6.2%.

Recent surveys from the manufacturing and services sectors have painted a similarly confused picture, with consumer confidence growing but the VAT hike and bad weather over the Christmas period hitting retailers hard.

Analysts believe the MPC is unlikely to make any rash policy moves to tackle a possible short-term inflation spike, with the Consumer Prices Index currently well above target at 3.5% thanks to the VAT rise and higher petrol bills, although the committee expects this to drop well below 2% as the recession drives down prices further.