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Base rate freeze decision unanimous

Base rate freeze decision unanimous

Category: Economy

Updated: 04/08/2009
First Published: 22/07/2009

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 It is now over 6 months old so the content may be out of date.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's decision to freeze the base rate of interest at 0.5 per cent was unanimous, minutes of the Monetary Policy Committee (MPC) show.

When asked to vote on Governor Mervyn King's proposition that the base rate should be maintained at 0.5 per cent and the programme of quantitative easing continue, the Committee voted unanimously in favour.

"There had not been enough clear evidence to suggest that the £125 billion target should be changed at this meeting," it said.

In the meeting, the MPC acknowledged that recent figures suggested that the recession was deeper than previously thought, but that survey indicators of more recent developments were encouraging, especially in the manufacturing and services sectors.

The Committee also said: "Retail sales, car registrations and consumer confidence all picked up in Q2 and were consistent with an outturn for consumption growth that was stronger than the Committee had thought likely in May. Indicators of housing market activity had continued to improve, and house prices had been broadly flat in Q2."

While there were adjudged to be prospects for a recovery, the weakness of bank lending continues to hamper any real progress, with net lending remaining weak in May.

The Committee also said that despite record rises, employment had come in higher and unemployment lower than it had anticipated. "The fall in employment over the past year had been moderate relative to the scale of output loss," it said.

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