Interest rates expected to be held

07-05-2009

Interest rates expected to be held
The Bank of England is expected to announce interest rates will be held at 0.5 per cent later today.

Analysts believe the May meeting of the monetary policy committee (MPC) will also show how well the central bank's campaign of quantitative easing is going.

In March, the MPC started the first tranche of its £75 billion spending spree – with funds created to add a boost to the economy and counter expected deflation.

Last month, the Bank had spent £26.5 billion purchasing assets and the full £75 billion will used by the end of this month.

At that point the MPC will be able to gauge the success of quantitative easing – although the effects may take many more months to be seen in the real economy.

A further £75 billion could also be created, with permission of the chancellor Alistair Darling.

Some experts are claiming interest rates could be held at 0.5 per cent for another 12 months from now.

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