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Bank holds interest rates amid mild slowdown

by: Emma Lunn
  • 06/11/2014
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Bank holds interest rates amid mild slowdown
The Bank of England has kept interest rates on hold at 0.5% for the 68th consecutive month.

Members of the monetary policy committee (MPC) also voted to maintain the bank’s programme of quantitative easing at £375bn.

Rob Wood, chief UK economist at Berenberg Bank, said rates were held because inflation is low, wage gains meagre and the economy is slowing a little.

“There is no pressing need for rate hikes right now, so it was little surprising to see the BoE standing pat today. Indeed, rate hikes are likely to remain off the table for the next six months, as rate setters wait for growth risks to fade and unemployment to fall further. We look for the first hike in June 2015, after the General Election,” he said.

Prime Minister David Cameron said last week it would be “lovely” for interest rates to remain at historic lows “forever”.

Neil Lovatt, director at Scottish Friendly, said that although the Prime Minister may be happy with today’s announcement, there will be millions of savers out there that will feel that they are not getting the best rates on their savings because of the fragility of the current political landscape.

“The Eurozone is one of Britain’s biggest trading partners and as such, fears over a fresh crisis on the continent and how that might affect the UK economy is probably a leading consideration in the Bank of England’s decision.

“When interest rates do rise, those with a mortgage should make hay while the sun shines for them and build up a cushion of savings to draw on if their mortgage repayments start to rise.”

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