Bank holds back amid positive signs

Policymakers yesterday kept quantitative easing (QE) at £375bn and held rates at their record low of 0.5 per cent once again this month in the wake of better-than-expected 0.3 per cent growth in first-quarter gross domestic product (GDP) and encouraging indications from industry survey data.

Manufacturing figures added to the recovery hopes yesterday after the Office for National Statistics reported the first back-to-back monthly rise in output from the sector in two years.

Lee Hopley, chief economist at manufacturers’ organisation EEF, said that while the no-change decision was expected, the Bank might still opt to expand QE to give the recovery a helping hand.

She said: “Some signs of growth at the start of the year, together with some stabilisation of activity indicators in April, will have been regarded as positive. But confidence that the underlying growth situation is improving will be fragile, leaving the possibility of more asset purchases on the table.”