Member Article

Interest rates held at 0.5%

The Bank of England has held interest rates at the historic low of 0.5% for the fourth month in a row.

The Bank decided against spending an extra £25bn in its quantitative easing scheme, deciding to continue with its current plan to spend £125bn.

Martyn Pellew, president of the North East Chamber of Commerce (NECC), said: “The measures taken recently by the Bank of England and the Treasury have had a positive effect and have been crucial to easing credit conditions in recent months. However, speculation that the UK may be about to climb out of recession is somewhat premature.

“Many NECC members are still facing difficulties getting finance and it is critical that the Bank of England does not act too early to tighten monetary policy, as this could stifle any recovery as quickly as it begins.”

Sarah Green, Regional Director, CBI North East, said: “With the economy and credit conditions still very weak, the Bank’s quantitative easing programme has further to run. That, rather than interest rates, is the MPC’s main concern.

“After only five months, it is still too early to determine the effects on the wider economy. So, a further extension through the autumn is needed, and clear communication of the Bank’s intentions throughout will be critical in order to prepare the markets.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .