BoE will not make a move on in­ter­est rates

The Pak Banker - - Front Page -

LONDON: Ac­cord­ing to econ­o­mists, the Bank of Eng­land (BoE) is widely ex­pected to keep in­ter­est rates on hold for the medium-term.

The Mon­e­tary Pol­icy Com­mit­tee (MPC) will start its two-day meet­ing to­mor­row and rates are ex­pected to be kept at the his­toric low of 0.5% - where they have been since March 2009.

In ad­di­tion, an­a­lysts ex­pect no move­ment on the quan­ti­ta­tive eas­ing (QE) scheme this month.

Bet­ter-than-ex­pected eco­nomic growth in the third quar­ter and a rise in man­u­fac­tur­ing ac­tiv­ity are likely to re­in­force the view that the Bank will leave quan­ti­ta­tive eas­ing on hold for now. How­ever, last month's min­utes re­vealed the Mon­e­tary Pol­icy Com­mit­tee were split three ways - for the sec­ond con­sec­u­tive month.

Adam Posen, again, called for an in­jec­tion of £50 bil­lion via the Bank's QE pro­gramme to boost the econ­omy.

Fur­ther­more, for the sixth con­sec­u­tive month, pol­i­cy­maker An­drew Sen­tance voted for in­ter­est rates to be lifted from their cur­rent his­toric low of 0.5% to com­bat stub­bornly high in­fla­tion.

Ac­cord­ing to IHS Global In­sight an­a­lyst Howard Archer: "The Bank of Eng­land is poised to end 2010 with­out giv­ing any presents to the econ­omy in the form of more quan­ti­ta­tive eas­ing (QE) but also not act­ing like Scrooge by putting in­ter­est rates up."

Mean­while, Philip Shaw, an econ­o­mist at In­vestec bank­ing group, be­lieves the prospect of more quan­ti­ta­tive eas­ing can­not be ruled out, par­tic­u­larly if the Bank "be­came se­ri­ously concerned that the re­cov­ery was run­ning aground."

The Bank of Eng­land will an­nounce its de­ci­sion on in­ter­est rates and quan­ti­ta­tive eas­ing on Thurs­day at 12:00pm. - PB News

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