DESPITE fears of a ‘triple dip recession’, the Bank of England has kept interest rates and its Quantitative Easing (QE) monetary stimulus programme on hold.
The Bank’s Monetary Policy Committee (MPC) yesterday voted to maintain the official Bank Rate at 0.5%.
The Bank said its Committee ‘also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves (QE) at £375 billion’.
The minutes of the MPC meeting will be published at 9.30am on Wednesday 23 January.
Last week, the central bank claimed that there had been a significant increase in the amount of credit made available to households and businesses, in a bid to signal that the government’s Funding for Lending Scheme (FLS) was working to free up credit.
Howard Archer, chief UK & European economist at IHS Global Insight, said: ‘The Bank of England certainly isn’t going to raise interest rates anytime soon given the economy’s extended weakness and limited recovery prospects in the face of a tight fiscal squeeze and still serious problems and uncertainties in the eurozone.’
Official figures for the fourth quarter gross domestic product (GDP) are due to be released on 25 January.
Meanwhile, millions of pension holders are ‘still likely to suffer reductions to their retirement incomes’, despite yesterday’s announcement that the current method of calculating the Retail Prices Index (RPI) is to be retained, the world’s largest independent financial advisory group, the deVere Group, has warned.
It’s chief executive Nigel Green said: ‘We suspect that the decision not to effectively reduce RPI is now likely to accelerate the number of pension schemes which will switch indexation from RPI to CPI.’
• The European Central Bank also kept rates on hold yesterday.
The ECB said: ‘At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively.’
This came as Greek unemployment rose to 26.8%, the highest figure recorded in the European Union (EU).
The official Greek data for October saw Greece overtake Spain – whose most recent official unemployment figure for the month of November was 26.6%.
So far, the ECB, IMF, and the EC troika have pledged a total of 240bn euros ($315bn; £196bn) in rescue loans, of which Greece has received more than two-thirds.
Under the terms of troika rescue funds, Greece is having to agree to huge spending cuts, mass sackings, pay cuts, pension cuts and the privatisation of the public sector.
