Base rate kept on hold

The base interest rate in the UK has been kept on hold at its all time low of just 0.5 percent. This is despite the fact that the recent general election resulted in a hung parliament. The base rate has been at 0.5 percent since March of last year, with this rate being the lowest it has ever been in the history of the Bank of England.

Analysts have predicted that the base interest rate will now remain at 0.5 percent for the foreseeable future, citing a number of reasons why it is unlikely to go up for some time. This is in contrast to other recent reports where officials believed that the base rate may have to go up soon in order to try and deal with the rising rate of inflation, which now stands at 3.4 percent, which is much higher than the 2 percent government target.

The government has also announced that it is not pumping any further money into the economy through the quantitative easing scheme, through which £200 billion has already been ploughed in since the scheme was introduced. However, rates are set to remain at this low level whilst the economy continues its recovery according to experts.

A number of groups have supported the decision by the Monetary Policy Committee to keep the base rate on hold. The Institute of Directors said that it was a good decision based on the fragile economy and the uncertainty over leadership of the country following the election result.

The British Chambers of Commerce added that the government needed to keep interest rates low and look at further quantitative easing because of dangers that were still facing the fragile economy of the UK.

The BCC said: “Any thought of raising interest rates, and withdrawing the QE stimulus, must be rejected until there is more conclusive evidence that growth is secure.”