The Bank of England has kept interest rates on hold at the historic low of 0.5% for an 18th consecutive month.
At the same time, the Bank of England Monetary Policy Committee (MPC) has decided to keep their asset purchase programme of Quantitative Easing (QE) on hold at £200bn.
This was a widely expected move. Members of the MPC are having to balance inflationary fears with the need to prevent dampening the economic recovery.
Whilst price inflation, as measured by the Consumer Prices Index (CPI), has been falling in recent months, it remains above the government target of 2%. The prospect of public spending cuts this autumn should reduce this inflationary pressure, although the VAT increase to 20% in January is likely to create a short-term spike.
A new survey from unbiased.co.uk has found that 67% of people think that interest rates will remain unchanged for the rest of this year.
Opinion on the future timing and severity of interest rates increases has become increasingly divided in the past couple of months, although consensus remains that rates will need to remain lower for longer.
