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Rates frozen again by the Bank of England

Rates frozen again by the Bank of England

Category: Economy

Updated: 06/02/2012
First Published: 05/05/2011

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 It is now over 6 months old so the content may be out of date.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 announced that the base rate of interest will remain at the record low of 0.5% for another month at the very least.

The clamour for rates to be increased has cooled in recent weeks as figures showed weaker-than-expected performance in the manufacturing and construction sectors, indicating a weak recovery in the economy.

The Bank's Monetary Policy Committee (MPC) also opted not to increase the size of its £200 billion quantitative easing (QE) programme.

All eyes will be on the minutes of the MPC's meeting that are to be published later this month.

They will show whether there has been any further split in the committee, as three members have called for rates to be increased in previous months, while one member voted for QE to be increased.

"The latest insight into the performance of the UK economy has been disappointing with all three sectors namely service, manufacturing and construction highlighting a slow down in growth and making the Bank of England rate decision to leave interest rates on hold an obvious move," said Chris Towner, director of FX Advisory Services, HiFX, said.

"However, the picture is not all gloomy and judging by the High Street over the past few weeks in the glistening sun, consumer confidence was hardly hiding in the shadows. Royal weddings tend to inject a feel good factor into the country.

"And given the unusual number of bank holidays we have had recently, retail sales and consumer sentiment should benefit, the outcome of which will be demonstrated when the latest economic data is released."

Rates in the eurozone were also frozen this month at 1.25%, having been increased from 1.0% in April.

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