Interest rates have again been pegged at their record low of 0.5% amid growing concerns over weak consumer spending, mixed results from high street retailers and little sign of the expected upturn for manufacturers.
The Bank of England’s Monetary Policy Committee (MPC) have now kept rates at 0.5% since March 2009.
While some economists and pressure groups have been urging the Bank to launch another round of quantitative easing (QE), under which it pumps cash into the economy, the Bank decided against it today.
Some £200bn of cash has already been via QE between March 2009 and February 2010 and last October the Bank said it would pump another £75bn into the economy.
The Bank’s decision came shortly after Office for National Statistics revealed a surprisingly sharp downturn in industrial output – including the manufacturing sector – in November last year.
UK’s biggest retailer Tesco failed to lighten the mood when it reported a 5% drop in festive sales in the UK, although some retailers enjoyed a good Christmas.
There have been other encouraging signs for the economy with indications that growth in the service sector picked up in December and the manufacturing sector contracted at a slower pace than the month before.
