Bank experts unanimous on decision to hold interest rates

Bank of England interest rate-setters were unanimous over their "wait-and-see" policy on the economy this month despite the UK's crawl out of recession, it emerged yesterday.

The Monetary Policy Committee (MPC) agreed that leaving efforts to

boost the money supply at 200bn and interest rates at 0.5 per cent would allow more time to judge the impact of support to the economy over the past 18 months.

Minutes of the February meeting said there was a case for more quantitative easing but it saw little point in attempts to "fine-tune" policy amid so much uncertainty.

Despite the "disappointing" 0.1 per cent growth for the economy in the final three months of 2009, the MPC decided that further stimulus could push up asset prices and fuel inflation expectations – although for some members the decision was "finely balanced".

Forecasts published by the Bank last week showed its Consumer Prices Index (CPI) benchmark was well below two per cent over its three-year horizon, despite a short-term spike to 3.5 per cent in January driven by rising VAT and petrol prices.

But the minutes said the forecasts did not show an "overwhelming risk" of a rapid fall in inflation, and so "did not suggest an immediate need for a further relaxation of the policy stance". Rate-setters added that the official GDP figures published at the end of January "might be understating" the true pace of the recovery – with retail sales, car registrations and rising house prices signalling returning confidence.

But credit conditions were likely to remain tight.