Interest rates stay at 0.5% as economy to pick up ‘in 2012’

Interest rates have stayed at the record low of 0.5%, the Bank of England Monetary Policy Committee confirmed yesterday.

The holding of the interest rate was again what the majority of economists were expecting, with it now looking increasingly unlikely that rates will change in 2011.

The news came yesterday amidst the widespread stock market crashes across the European and North American economies, as two major European economies, Spain and Italy, became perilously close to having to default on debts.

Quantitative easing is now quickly becoming the new economic focus in an effort to stimulate growth in the UK. Quantitative easing is designed to increase the amount of money available to businesses, with calls for the UK’s QE program to be expanded further having come from various business leaders.

Ian McCafferty, the CBI Chief Economic Advisor, said about the situation in the UK and interest rates, ‘"While we continue to believe that the UK economy will pick up into 2012, we won’t see clear evidence of this in data for some months yet, leaving the Bank unlikely to alter its policy before the end of the year.