Decision due on interest rates

Thu Nov 5 2009 08:07:08

The Bank of England is due to announce its latest decision on interest rates and quantitative easing.

Economists have suggested that while interest rates are likely to remain at 0.5 per cent, the Bank of England would increase the amount of money pumped into the economy from £175 billion to £225 billion.

The Bank of England's injection of £175 billion to date has not yet pulled Britain out of recession, and the central bank now faces a difficult decision on whether to raise the stakes.

The bank's Monetary Policy Committee began its monthly two-day meeting yesterday. Markets are waiting to see if the amount will be increased, and if so, by how much. Some think the bank could add £25 billion or more.

Simon Hayes at Barclays Capital: "The decision appears finely balanced, although expectations are tilted towards an extension."

The decision comes two weeks after disappointing news that UK gross domestic product, or economic output, fell by 0.4 per cent in the third quarter, contrary to expectations that the economy would move into growth.

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