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Bank set to hold interest rates

Bank set to hold interest rates - commercial mortgages
Date: 12/10/2009

The Bank of England is expected to announce no change in policy when it reveals the outcome of its most recent meeting later.

The Bank is likely to hold interest rates at 0.5% and leave its £200bn asset purchase programme unchanged.

Last month, the Bank added £25bn to its quantitative easing programme, which involves printing money to buy assets from firms to stimulate the economy.

It is expected to wait until the scheme runs out before taking further action.

'Scene set'

In November, the central bank said that the fragile economy and the risk of inflation falling below its target of 2% had led it to extend its quantitative easing scheme, which runs out in January.

But since then, the economic data has been largely positive.

"Last month's decision set the scene until February, which we expect to be the next focal point for UK monetary policy," said Philip Shaw, economist at Investec.

"We would be shocked if there were any result other than the Bank rate remaining on hold and the QE target fixed at £200bn."

On Wednesday, Chancellor Alistair Darling said the economy would shrink by 4.75% this year and that consumer inflation would rise from 1.5% to about 3% early next year before falling back.

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