Bank of England set to hold interest rates


Bank of England set to hold interest rates
The Bank of England is expected to hold interest rates at its historic low of 0.5 per cent later today.

Analysts claim further cuts are unlikely as the monetary policy committee (MPC) has already expressed concerns as to how very low interest rates would affect the profitability of lenders, sandwiched between maintaining higher savings rates and low borrowing rates.

The main attraction from the decision from the monetary policy committee (MPC) at 12:00 BST today will be how the policymakers are dealing with their new quantitative easing tool.

The chancellor Alistair Darling has initially allowed the MPC to create £75 billion for the purpose of buying assets to stimulate the economy.

Experts predict interest rates could remain at 0.5 per cent even into next year.

Howard Archer at IHS Global Insight said: "We suspect that interest rates are set to stay at 0.5 per cent well into 2010 as we believe that GDP will contract through this year before the economy hopefully stabilises in early 2010 and then starts to gradually recover," said

"The UK clearly currently remains deep in contraction territory with a return to growth still looking some way off."

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