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LONDON: The Bank of England is set to keep its key interest rate at a record low 0.50 per cent on Thursday to support Britain's weak economy but will resist calls to pump out new money, analysts said.
The BoE's main lending rate has stood at an all-time low since March 2009, when the central bank also decided to begin injecting £200 bn into the economy under a policy known as quantitative easing.
With Britain enjoying only anaemic growth amid fears of a return to global recession, business leaders have suggested that the BoE's nine-member Monetary Policy Committee could launch a new round of QE, or the pumping out of new money via the purchase of government and private assets.
But opponents of the policy argue that fresh stimulus would fuel inflation, which in Britain is already far above the BoE's target rate.
“The MPC looks set to maintain the bank rate at 0.5pc on Thursday” following its latest monthly meeting, said Investec economist Philip Shaw.
“Further QE is possible over the coming months, but the high prevailing rates of inflation are likely to dissuade members from sanctioning further asset purchases unless there are signs that the UK is re-entering a lasting downturn.”—AFP
