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Bank of England leaves base rates untouched

The Bank of England MPC has left UK base rates at 0.5% for the 15th consecutive month and made no changes to the quantitative easing program. This comes at a time when concerns regarding the forthcoming budget have arisen and the impact which potentially £60 billion in budget cuts will have on the economy. As a consequence the MPC has pegged UK rates at 0.5% even though the Organisation for Economic Co-operation and Development believes that UK base rates will need to rise sooner rather than later and could peak of 3.5% over the next 18 months.

This is rather a bizarre economic situation whereby UK base rates do not seem to be having an impact on consumer confidence and liquidity in the marketplace. With base rates at 0.5% you may have assumed that liquidity would be in plentiful supply for the banking community but aside from the aftermath of the credit crunch we also have problems within the European debt market. As a consequence, UK base rates are having little or no impact upon economic activity or business and consumer confidence in the short-term.

It would take a brave person to forecast when UK base rates will start to rise!

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