Bank of England maintain base rates at 0.5%
The Bank of England today confirmed what many in the markets had expected that UK base rate will remain at 0.5% for the foreseeable future. The bank also confirmed that, via the MPC, the quantitative easing programme will be maintained at £200 million although many expect these purse strings to be loosened in the short to medium term. There was little in the way of detail issued today, but analysts and economists will await the minutes from this meeting to see exactly how each individual MPC member voted.
There has been some confusion and some conflict between MPC members with opinions and strategies spread right across the spectrum from an increase in UK base rates to an increase in the quantitative easing programme. It seems at this moment in time more likely that we will see quantitative easing reignited in the short to medium term against UK base rates rising over the same period.
It has to be said that the Bank of England, and the UK economy, is walking something of a tightrope where one false move could effectively negate progress made over the last 12 months and push the UK economy back into recession. When you consider the problem of inflation and the problem of a potential credit crunch part two there is much to think about for the MPC.
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