The first interest rate decision of 2010 has now been announced by the Bank of England's Monetary Policy Committee. Unsurprisingly, UK interest rates have once more been held at their record low of 0.5% (external website). The smart money is now on them remaining unchanged at this level for the remainder of this year.
Last month, the Pre-Budget Report 2009 (PDF format, 3.9MB) (external website) set out the Treasury's view that interest rates will not budge from 0.5% any time soon, in order to shore up the burgeoning economic recovery. The Pre-Budget Report 2009 said:
The Bank Rate is at a historically low level of 0.5% and is expected to continue to provide an ongoing and powerful stimulus throughout next year. [...] Market expectations are for Bank Rate to remain at the historically low, expansionary rate of 0.5% until the second half of 2010 and the MPC is expected to complete its £200 billion programme of asset purchases by the end of January 2010.
This has lead some commentators to suggest that, for now at least, the Treasury is calling the shots on interest rates (external website), with the MPC effectively forced to follow suit.
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