Articles - Santander comments on Bank of England's 0.50% interest rate


Santander comments on Bank of England's decision to hold interest rates at 0.50 per cent

 Barry Naisbitt, Chief Economist at Santander, said:

 "After three Monetary Policy Committee (MPC) members again voted to raise rates last month and with inflation at 4.5% being well above its target rate, today's decision to hold rates is likely to have been another split vote.  The recent relatively weak indicators of output growth and low consumer confidence are likely to have played a major part in persuading MPC members to keep rates on hold.  But the split on the MPC indicates that these remain difficult times.

 "The Bank of England's latest Inflation Report pointed out that inflation is expected to rise further in the months ahead, with the recently announced energy price rises pushing inflation up.  But with the economy as a whole showing a flat picture over the past two quarters, the MPC has been ‘looking through' this anticipated rise and expects inflation to fall back next year.  So the majority of members have been voting to hold rates.  Later this month there will be interest in the MPC minutes to see how the new member of the MPC voted, especially since he replaced Andrew Sentence who had been voting for a 50 basis points rise in rates."   

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