THE Bank of England held fire on new policy yesterday, despite the darkening outlook for the UK economy.
Its Monetary Policy Committee decided not to increase quantitative easing (QE) and kept rates on hold again, an approach analysts have put down to a concern to see how funding for lending (FLS) and the most recent round of asset purchases play out before taking further action.
“It comes as no surprise that the Monetary Policy Committee has decided to sit on its hands,” said Tom Hooper at KPMG, “After all, it was only last month that they decided to embark on another round of QE.”
Some analysts have suggested that FLS has already hit the market. “Swap rates and three month Libor have both fallen by around a quarter of a per cent since [FLS was announced],” said Ray Boulger of mortgage adviser John Charcol, “FLS has also produced record low 5 year fixed rates.”