Decision to freeze UK interest rates was unanimous

Thursday 22 November 2012

Business meeting

The decision to hold UK interest rates at 0.5 per cent in November 2012 was a unanimous one, it has been revealed.

Latest minutes from the most recent meeting of the Bank of England's Monetary Policy Committee (MPC) show that all nine members voted for this course of action.

The decision should not come as much of a surprise given that there has been no change to the base rate since March 2009.

But the decision to hold the Bank's quantitative easing (QE) programme at £375 billion was not unanimous - this was agreed by a majority of 8:1.

David Kern, chief economist at the British Chambers of Commerce (BCC), said the committee remains divided about the value of increasing QE in the future, and such a move cannot be excluded.

However, he claimed this course of action should not be considered unless new threats to the stability of the UK banking system emerge.

"We believe that more QE would increase longer term risks of bubbles, financial distortions, and higher inflation, while only marginally benefitting the UK economy," Mr Kern added.

He said the MPC should do more to support a revival in business lending, both by making better use of the existing QE programme, and by using measures other than QE alone.

Posted by Steve Williams