UK interest rates remain frozen at their record low of 0.5% (external website), following the latest announcement from the Bank of England's Monetary Policy Committee (MPC) at midday today. Some economic commentators now believe that the MPC will be forced to maintain interest rates at this 315-year low for an extended period, in order to help boost the UK's weak return to economic growth.
This follows the recent publication of the latest official estimates on gross domestic product (GDP) for the third quarter of 2009, which showed a surprise fall of 0.4 percentage points (PDF format, 100K) (external website). In light of these figures, the Centre for Economics and Business Research (CEBR) (external website) stated that it now expects no move in interest rates until some time in 2011. According to the CEBR:
[T]he latest GDP figure supports our view that the UK economic recovery is likely to be anaemic and that substantial policy stimulus will continue. [... W]e expect interest rates to remain at 0.5% through 2010 and into 2011.
The MPC also announced that an additional £25 billion will be pumped into the quantative easing programme (external website).
The Bank of England will publish its latest projections for economic growth in its November 2009 Inflation Report (external website), which will be released on 11 November 2009.
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