Bank 'unlikely to move from 0.5% base rate'

By Sarah Engle, Wed 4 Aug 2010 - Published in Banking

The Bank of England is unlikely to increase the base interest rate in the near future, an expert has argued.

Last month, Dr Andrew Sentance of the Bank's Monetary Policy Committee (MPC) stated that the base rate should be increased from its historic low of 0.5 per cent and advocated a rise of 25 basis points.

Commenting on the situation, Investment and Business News editor Michael Baxter said that the next MPC meeting could see more members support Dr Sentance's call, but it is unlikely that the motion will be carried.

"I don't think the rate of interest will go up. I think the majority are going to vote for it to stay at its current level. The feeling is that the third quarter isn't going to be so good," he speculated.

Mr Baxter added that the UK is still at risk of a double-dip recession, as it will take some time to see how the European austerity drive and the emergency Budget will affect the country's economy.

The last MPC meeting saw the group vote to hold the 0.5 per cent base rate, with Dr Sentance being the only member of the seven-strong committee to vote against it.

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