Interest rates to remain unchanged, again!

05/11/10
Financial News

Interest rates are to remain at the same level.

The Bank of England will keep interest rates at the current level.

As expected the Bank of England has left interest rates unchanged at 0.5%.

In light of more positive economic data it has also decided not to embark on a further round of Quantitative Easing (QE). The recently released GDP (Gross Domestic Product) figures were better than expected which showed that the UK economy had grown by 0.8% in the third quarter.

The better economic news seems to have been sufficient to postpone another round of QE, at least for the time being. However, on the other side of the Atlantic, the Federal Reserve has given the green light to a further round of QE injecting and additional $600 billion (£375bn) into the US economy over the next eight months. The news triggered rises on the world’s stock markets.

 

The decision to hold off on another round of QE was not greeted with universal approval. David Kern, the chief economist at the British Chambers of Commerce (BCC) said: “We believe there are strong arguments for injecting additional QE into the economy over the next few months. As VAT increases to 20% in January, and the deficit-cutting programme moves to a higher gear in 2011, risks of a setback will inevitably worsen”.