Bank unmoved over interest rates and QE - Economy - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Bank unmoved over interest rates and QE

Bank unmoved over interest rates and QE

Category: Economy

Updated: 10/11/2011
First Published: 10/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England has decided against sanctioning any more quantitative easing or changing interest rates.

Having decided to inject another £75 billion into the economy through quantitative easing last month, it had been broadly anticipated that no further action would be taken this time around.

It was decided that extra money should be pumped into the economy last month as concern over how the recovery in the UK economy is progressing has started to grow.

Not only have the public spending cuts announced last year begun to bite, uncertainty has also been mounting over the impact that the eurozone debt crisis could have on these shores.

The latest bout of Bank inertia means interest rates have been at the record low of 0.5% for 33 months in a row.

While thousands of mortgage borrowers on deals tracking the Bank of England base rate will remain content that their repayments are staying low for at least another month, savers will continue to feel starkly contrasting emotions.

Low interest rates mean the returns paid on savings accounts continue to disappoint, particularly given the current high rate of inflation.

Research from Save Our Savers has revealed that if inflation and interest rates remain as they are, savers can expect to suffer a net loss of £43 billion in the next 12 months.

With Consumer Prices Index (CPI) inflation currently at 5.2%, the vast majority of savers are seeing the real value of their money erode.

"Savers, pensioners and anyone on a fixed income are suffering terribly from the Bank's utter failure to get to grips with inflation," said the action group.

"Sir Mervyn King repeatedly tells the Chancellor that inflation will come down in due course, but the Bank of England's inflation forecasts have been consistently wrong.

"According to the Bank of England's forecasts two years ago, CPI inflation should currently be just 1.5%!"

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.