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Bank of England MPC meeting to be non-event

Today's two-day meeting of the MPC will effectively be a case of discussing the UK economy, recent economic signals, the UK government's budget reductions and then deciding to keep UK base rates at 0.5%. While there is some debate as to whether the Bank of England will re-introduce fiscal easing policies there is no doubt that UK base rates are set to remain low for some time to come.

In many ways the UK government's emergency budget and tax increases have taken the sting out of any potential economic recovery and the threat of inflation. As a consequence, in order to try and balance what will be difficult economic times for the UK business and consumer arenas in the short to medium term, cheap lending will remain on the table for some time. There are still hopes that the private sector will attempt to fill the vacuum created by cost-cutting in the public sector but so far there are few signs this is happening.

Cash flow will be a major issue for many companies over the next couple years and indeed more pressure will be placed upon the UK banking community to "join the party". Whether UK banks take up this invitation remains to be seen.

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