Bank of England leaves base rates unchanged
The Bank of England MPC (Monetary Policy Committee) has today maintained UK base rates at 0.5% and refrained from announcing an increase in funding for the quantitative easing program. This was very much the case which we covered earlier today although the authorities have indicated they will look again at the UK economy next month and decide whether to alter base rates or increase the funding for the quantitative easing program.
Even though this particular strategy from the Bank of England was pretty much expected by the vast majority of analysts, it does place a question mark over the short-term future of the UK economy. It will be interesting to see how the stock market and money markets react over the coming days as the news from the MPC continues to filter into the market.
If the quantitative easing program is increased in February then we can take it for granted that the UK government and the Bank of England believe that the economy needs further assistance in the short term. This would be a bitter pill for investors who appear to have invested funds on the understanding that the economy has turned and will soon be able to stand on its own 2 feet.
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