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Wednesday, 20 March, 2002, 12:01 GMT
Bank chiefs unanimous on rate freeze
Bank of England
The Bank last cut rates in November
The Bank of England's interest rate-setting committee voted unanimously in favour of leaving the cost of borrowing unchanged earlier this month.

All nine members of the Bank's monetary policy committee (MPC) voted to keep the base rate at 4.0% according to the minutes of their March meeting.

The unanimous vote reveals a growing degree of consensus in favour of leaving rates on hold, and suggests that momentum for a rate increase could build up in the months ahead.

In February, seven MPC members voted to keep rates unchanged, with two voting for a further cut.

The MPC cut interest rates seven times last year in an effort to ward off recession, with the most recent reduction coming in November. UK rates are now at a 37-year low.

Many economists have predicted that with the economy now showing signs of a return to steady growth, the next move in interest rates will be upwards.

Outlook improving?

At its March meeting, the MPC took the view that the latest economic data pointed on balance towards "somewhat stronger prospects for UK activity."

The panel took note of the first manufacturing sector expansion in 12 months in February, along with survey evidence of an imminent increase in business investment.

It also noted signs of continued strength in consumer spending, while acknowledging that high levels of personal debt could trigger a "sharp adjustment" in consumer demand in the months ahead.

But the MPC decided against changing interest rates until the evidence for or against an economic recovery became clearer.

Official statistics out on Wednesday showing a surprise fall in jobless numbers last month further reinforced the view that the UK economy is picking up.

The number of people out of work and claiming benefits fell by 5,000 from January to 947,200, the Office for National Statistics said.

Inflation benign

The MPC decided earlier this month that inflation is likely to remain below the government's 2.5% target rate "for some time", attributing unexpectedly strong price growth during January to temporary factors.

On Tuesday, official figures showed that the headline rate of inflation slowed to 2.2% a year in February, from 2.6% in January.

The MPC is allowed to over or undershoot the target rate by a maximum of one percentage point.

The expert panel also gave a positive assessment of the world economy, taking the view that "the recovery appeared to be coming earlier and more rapidly, and to be more broadly-based among countries and sectors, than previously expected."

See also:

10 Jan 02 | Business
UK interest rates left unchanged
19 Dec 01 | Business
BoE solidly behind unchanged rates
19 Sep 01 | Business
Bank considered UK rate rise
15 Aug 01 | Business
Bank split over rate cut
18 Jul 01 | Business
UK rates may head higher
20 Feb 02 | Business
Two voted against UK rate freeze
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