No sign of base rate change

The Bank of England’s Monetary Policy Committee has shown no indication of shifting away from maintaining the base rate at 0.5 per cent, according to minutes of the body’s August meeting.

A voting split of six to three occurred on the proposition that the rate be held and the quantitative easing programme be extended by £50 billion, with governor of the Bank Mervyn King voting with the minority.

However, the minutes made clear that this disagreement was over the size of the easing, with Mr King and two others wanting a £75 billion increase.

The document also stated that inflation is expected to stay below target in the months ahead, something that could help keep the rate down and enable consumers to find credit deals charging less than their present ones.

Hetal Mehta, the senior economic advisor to the Ernst & Young ITEM Club, recently predicted base rates will stay low until inflationary pressures re-emerge, at which point she forecasted they are likely to rise quickly.

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