Bank of England holds interest rates at 0.5%
The Bank of England again announced its decision to hold the Base Rate at a record low of 0.5% for the 28th consecutive month.
The move had been widely expected by economists in light of slow growth in Gross Domestic Product (GDP). Furthermore, governor Mervyn King had hinted the Monetary Policy Committee (MPC) may not increase rates while the economy remains fragile.
Critics of the Base Rate freeze will no doubt point to the current high level of inflation which stands at 4.5% and is far in excess of the government’s 2% target.
Although an interest rate freeze is good news for borrowers with a tracker mortgage, low rates cause difficulty for savers attempting to get a decent return on their cash.
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Commenting on the announcement, Simon Rose of campaign group Save Our Savers said: ‘Perhaps the MPC believes that sacrificing our savings – by keeping interest rates low and failing to control inflation – will magically restore economic growth. We call upon the MPC and the government to abandon their short-sighted policies which are undermining the future financial health of the country.’
In addition to the rate freeze, the MPC also voted not to extend its £200 billion quantitative easing programme to pump money into the economy.
In contrast, the European Central Bank today voted to increase interest rates to 1.5% in an attempt to ease inflation.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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