Bank of England leaves interest rates unchanged as UK recovery picks up

Friday, April 11th 2014 - 04:22 UTC

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According to IMF the UK economy would be the fastest-growing in the G7 this year.

UK interest rates have been held at their record low of 0.5% for another month by the Bank of England. On Thursday the Bank also kept the size of its bond-buying stimulus program unaltered at £375bn. No changes had been expected to either rates or the bond-buying measure, despite recent evidence that the UK economy is continuing to recover.

Most economists do not expect the Bank to increase interest rates until the first half of next year.

The recent fall in the rate of inflation has also reduced any pressure on the Bank's monetary policy committee (MPC) to raise rates. The UK's inflation rate fell to 1.7% last month, which was a four-year low and below the Bank's target of 2%.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The second quarter of 2015 currently looks the prime candidate for when the Bank of England starts to inch interest rates up - given both the inflation forecasts contained in the Bank of England's February Quarterly Inflation Report and the general drift of comments made by MPC members in recent weeks.”

Earlier this week, the International Monetary Fund said the UK economy would be the fastest-growing in the G7 this year. It predicted the UK economy would grow by 2.9% in 2014, up from its previous estimate of 2.4%, and will see growth of 2.5% next year.

However, recent business surveys have suggested that the pace of growth eased slightly in March, and David Kern, chief economist at the British Chambers of Commerce, warned against any premature action by the Bank.

“Existing calls from some quarters for an early rate rise are unwelcome and risk unsettling business plans for higher investment,” he said.

“The Bank of England must strive to maintain an environment that supports investment, with clarity on the future path of interest rates and action to keep inflation low.”

The Bank had previously pledged not to raise interest rates until the UK unemployment rate fell to 7% or below, but it changed this policy when the jobless rate fell faster than expected. The Bank is now looking at a range of different indicators, including how far the economy is running below capacity.

Categories: Economy, Investments, International.

Tags: Bank of England, IMF, UK interest rates.

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Conqueror
Oh, look at that. WE have no need to change our “economic model”. Explore the 2.9% growth. That's 2.9% of an economy one thousand times that of argieland. Why don't we give workers 30+% pay increases? There's no “simple” explanation. Other than that CFK is “simple”. Argieland has adopted a new model. Poverty, starvation, dictatorship, nepotism. Don't care. Let argieland die!
Apr 11th, 2014 - 02:03 pm 0
Fido Dido
UK's economy “grows” while debt and unemployment is on the rise..really good news huh...
http://www.maxkeiser.com/?s=UK&submit=Go

Idiot Conqueror seriously believes in flying reindeer's.
Apr 11th, 2014 - 04:21 pm 0
Teaboy2
Lol Fido - You really must learn to check and counter check the facts before posting assumptions based solely on one piece of evidence.

The UK deficit has been reduced to £96 billion as of December 2013, meaning borrowing is lower as spending has been cut, whilst unemployment has been reduced and employment levels are now at an all time high, meaning more income tax paid to the government, and reduced wealth fare bill as a result. Less spending, more income for the government means less borrowing and reduction in deficit. Within the next 12 years, if we keep going the way we are, the UK will not be borrowing anything at all, and eventually all debts paid off completely - So we are on the right path, unlike argentina.

Also our current level of debt is about 75% of GDP (your extra 100billion doesn't change anything, as its nothing but pennies in the pound so to speak) So our current level of debt v GDP is nothing compared to the levels of debt we experienced in the 1930's to 1950's where it peaked at 240% GDP, which is on par with where Japans current level of debt is today.

Also 70% of the UK's debt is actually held in the UK in pension funds etc, and is not therefore owed to any foreign body or state, unlike most other major nations like the USA. The UK also has longer repayment periods than most other countries, we get as much as 12 years before making repayment for any loan taken, compared to Greece who has to constantly make repayments to loans and therefore has to borrow more to make repayments on previous loans. So we don't have to borrow more to meet repayments, as we have up to 12 years before making any repayment towards, or before repaying, any loan taken.

You will find the following will educate you better - http://falseeconomy.org.uk/cure/how-big-is-the-problem

Just 6p in every pound spend last year went on debt repayments compared to 8p in 1996. So were in a better position than we were in 1996 Fido - Think about it Fido.
Apr 12th, 2014 - 01:06 pm 0

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