Bank shuns action to boost economy
The Bank of England kept interest rates at a record 0.5 per cent yesterday and stopped short of taking emergency action to kick-start the faltering UK economy.
Fears the UK is facing a double-dip recession have fuelled expectations that the Bank’s Monetary Policy Committee (MPC) will extend its £200bn quantitative easing (QE) programme – effectively printing more cash.
Business leaders and economists say there are strong arguments in favour of more QE but accept action is unlikely until later in the year. Such a move would be high-risk because it could fuel inflation now well above target at 4.4 per cent, and put more pressure on household budgets. Soft manufacturing, a contraction in the services sector and stock market turmoil have prompted forecasters to slash economic predictions.