The Monetary Policy Committee of the Bank of England have kept UK interests at their record-low 0.5% in a bid to prolong the ‘soft’ approach to monetary policy and encourage demand, despite calls from some to raise rates in a bid to stimulate growth in the UK’s stumbling economy.
The Monetary Policy Committee, the body responsible for deciding central interest rates, voted overwhelmingly in favour of keeping rates at their current level, despite vocal disagreement from a key committee member.
Mr. Andrew Sentance, a member of the Monetary Policy Committee, is noted as having proposed a 0.25% rise in interest rates to 0.75%, and was the only dissenting vote in the decision to keep rates at their current record level, which was decided 8-1 in favour.
However, with inflation still sitting at above government target levels and the ongoing quantitative easing programme yet to deliver the significant boost in demand analysts have expected, the case for raising rates now looks stronger than it has done for some time.
Additionally, Mr. Sentance’s viewpoint is becoming increasingly shared amongst think-tanks and academics, some of who are moving in favour of harder economic policy to try and jolt the economy back to life.
UK interest rates have remained at 0.5% for over a year and a half, as a result of the central bank’s attempts to stimulate economic growth in light of the global recession off the back of the transatlantic financial crisis.
Analysts have now suggested that interest rates may continue to be suppressed by the Monetary Policy Committee, as the UK continues to tentatively grow out of recession.