Bank set to hold interest rates

The Bank of England will hold back from prescribing further doses of emergency medicine for the ailing recovery today amid signs the economy will return to growth.

The Bank’s Monetary Policy Committee will maintain interest rates at record lows of 0.5 per cent and leave the targeted size of its quantitative easing (QE) programme at £375bn as the Bank works through £50bn of asset purchases announced in July.

Most economists think the panel will sanction further QE in November and hold its nerve today, a view reinforced by strong services data released earlier this week.

The move will come shortly after the Bank admitted that QE has increased the fortunes of the wealthiest five per cent of Britons while eroding the value of many pension funds.

Vicky Redwood, chief economist at Capital Economics, said: “With the £50bn of extra asset purchases announced in July still under way, there is no immediate pressure on the MPC to do more this month.”

The MPC meeting is the first for former CBI chief economic adviser Ian McCafferty, who has replaced Adam Posen.