MPC Votes Unanimously to Keep Standard Base Interest Rate at Historic Low
The minutes of the December meeting of the Bank of England’s Monetary Policy Committee (MPC) revealed that all members voted in favour of keeping the standard base interest rate at the current 0.5%. The current interest rate has been steady since March 2009. The minutes also revealed that only one member, David Miles, voted to increase the asset purchase programme for an additional £25bn. The minutes also made reference to the fact that inflation is expected to remain above the target goal set by the Bank of 2.0%.
The report said, “Inflation was likely to remain above the 2% target for the next year or so, owing in part to the continuing impact of the rise in university tuition fees and higher domestic gas and electricity and other administered and regulated prices.
“Although inflation was at 2.7%, and seemed likely to remain above the target for the next year or so, it was judged likely to fall back to the target over the medium term. In the light of all this, the current size of the asset purchase programme seemed appropriate for the present.”
While last year marked a possibility of the MPC raising the interest rate there were no clear warnings from economists of the same this year. In fact many have forecasted that the MPC will leave the interest base rate level of 0.5% at its historic low through next year and possibly 2014 as well. This is good news for those hoping for borrowing to remain cheap to allow for mortgage or remortgage financing.