Preview: Bank of England's MPC November interest rate meeting
Wednesday, 09 November 2011 05:48
The Bank of England’s Monetary Policy Committee (MPC) meets today and tomorrow for its November meeting and it is almost certain that they will not produce any more dramatic policy announcements like they did last month.
In October the MPC decided to introduce a further round of quantitative easing (QE), to the tune of £75 billion to, in theory at least, help the flow of money to companies and individuals through increased lending. This takes the total level of QE issued to £275 billion.
The latest issue of funds through QE will take around four months to implement so it is very unlikely that there will be any further addition to this announced tomorrow. It is very likely that a further £50 billion of QE will be issued in the first quarter of 2012.
The Bank of England is not expected to raise interest rates due to the fragility of the UK economy and lack of consumer confidence. And there is little room for manoeuvre in lowering them from the level of 0.5 per cent that base rate has remained at for the past 31 months and the last minutes gave no real indication that the MPC were swaying towards a quarter point cut.
Howard Archer, from IHS Global believes the focus of the meeting will be on GDP growth forecasts and the likely future movements in the consumer price index measure of inflation.
He said: “The growth forecasts are likely to make unappetizing reading as there can be no doubt that they will have to be revised down appreciably. This may well also lead to a reduction in the consumer price forecasts over the medium term.
“The minutes of the October MPC meeting revealed a marked escalation of concern within the committee over the current state of the economy. Specifically, the MPC highlighted the worsened international economic situation which threatens to increasingly limit UK exports.”
Although there has been no indication that interest rates will be lowered, it also seems certain that the rate will not go up until before 2013, good news for homeowners but dire news for savers.
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