The Bank of England’s Monetary Policy Committee (MPC) has voted to maintain the Bank Rate at 0.5% and the size of the Asset Purchase Programme (so-called quantitative easing) at £375 billion.
The MPC voted by a majority of 8-1 to maintain the Bank Rate and unanimously over quantitative easing. Ian McCafferty preferred to increase the Bank Rate by 25 basis points, given his view that the path of domestic costs was more likely to lead to inflation exceeding the target in the medium term than was embodied in the Committee’s collective November projections.
Nick Dixon, investment director at Aegon UK, said: “Although MPC members who voted to hold rates had one eye on the US Fed’s decision next week, the MPC’s forward guidance indicate that rates will remain low for ‘some time’.
“With flat prices in the UK and slowing global growth, we don’t expect any interest rate changes until well into 2016.”
Calum Bennie, savings spokesperson at Scottish Friendly, added: “Mark Carney and the MPC has once again kicked the idea of a UK interest rate rise into the long grass. All eyes will now turn to the US Federal Reserve’s decision next week. If the Fed decides to increase its base rate, there will be mounting pressure on Mr. Carney to follow suit in the new year. That the base rate remains at 0.5% is no surprise, particularly with inflation currently in negative territory, oil prices tanking and continuing concerns around the global economy.
“It’s unlikely that savers will be receiving good news on interest rates any time soon. Derisory rates look set to continue, even if the base rate does increase moderately in 2016, and will remain part of the economic environment for some time. Those looking to get a return from any investment should look towards alternatives such stocks & shares ISAs as a way to potentially grow their money although risk is attached.”