To the surprise of no one, The Bank of England Monetary Policy Committee (MPC) has once again voted to hold interest rates at 0.50%.
The stock of asset purchases financed by the issuance of central bank reserves – so-called quantitative easing – stays at £375 billion.
Barry Naisbitt, chief economist at Santander UK, said: “Following the major change in the approach to monetary policy announced last August, the Monetary Policy Committee (MPC) was not expected to do anything other than hold Bank Rate again this month.
“However, the decision was made against a background of continued positive economic news. The UK economy is estimated to have grown by 0.8% in the third quarter and the survey indicators of activity point to a strong performance in the final quarter of last year too. The unemployment rate has fallen faster than the MPC expected back in August and, at 7.4% in October, is approaching the 7% policy threshold quickly.
“At the same time, inflation has fallen back and at 2.1% in November is just a whisker away from the 2% target. This will give a degree of comfort to the MPC that it has scope to hold rates at their current level for some while longer. Next month’s Inflation Report and any changes that the MPC may make to its outlook for the economy are likely to be the next areas of focus.”
The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009.
The programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The previous change in the size of that programme was an increase of £50 billion to a total of £375 billion on 5 July 2012.
