Bank of England set to sit tight on 0.5pc rate

The Bank of England is again set to leave its key interest rate at a record low of 0.50 per cent on Thursday after it launched measures to cool Britain’s housing market. The BoE is forecast also to leave its level of cash stimulus, or quantitative easing, pumping around the economy at £375 billion ($642 billion, 472 billion euros). This week’s meeting of the bank’s Monetary Policy Committee (MPC) ‘seems unlikely to be a major step towards higher interest rates’, said Samuel Tombs, senior economist at Capital Economics consultants. We suspect that the vote to leave (the rate) on hold will be unanimous once again. And while a rate hike before the end of the year cannot be ruled out if the recovery accelerates, the likely weakness of inflation means that there is a good chance the MPC sits on its hands until early 2015.’ Consumer prices have been sliding in Britain, with 12-month inflation slowing to 1.5 per cent in May – the lowest level for four and a half years. The central bank is therefore having to deal with inflation that is below its 2.0 per cent target, and a housing market that has rallied over the past year, especially in London, according to AFP.