Mortgage News
MPC: Rates to stay at 0.50% to 2011/12
The Bank of England’s Monetary Policy Committee voted 7-2 to keep rates on hold at 0.5% in November and predicted interest rates would stay low possibly until early 2012.
The MPC thinks we’ll avoid a double-dip, according to the last MPC minutes but said at the earliest, a rate rise to 0.75% could come Q4 2011 or even later in 2012.
“Whenever interest rates do finally start to rise, they are likely to remain very low compared to past norms, as monetary policy will need to remain loose for an extended period to offset the impact of the major sustained fiscal squeeze,” according to the Minutes.
In November, seven members of the Committee – the Governor, Charles Bean, Paul Tucker, Spencer Dale, Paul Fisher, David Miles and Martin Weale – voted to hold rates at 0.50% and maintain asset purchase at £200bn.
Two members voted against the proposition. Adam Posen preferred to maintain Bank Rate at 0.5% and increase quantitative easing by £50bn to £250 bn, with Andrew Sentance voting to increase Bank Rate by 25 basis points and maintain Quantitative Easing at £200bn.
Howard Archer, chief European and UK economist, IHS Global Insight, said: “A key thing to note is that there was no change in the voting pattern within the MPC in November, with no members joining Adam Posen in voting for more Quantitative Easing or Andrew Sentance in wanting a small interest rate hike.”
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