MPC 'will not change interest rate next week'

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MPC 'will not change interest rate next week'

Fri 4th Sep 2009

MPC 'will not change interest rate next week'

The Bank of England's Monetary Policy Committee (MPC) will not alter the base rate of interest at next week's meeting, according to an industry analyst.

Michael Baxter, economist at Defaqto, claimed that it will be a surprise if the panel changes anything at all at its meeting on September 10th.

He compared the MPC's fiscal stimulus policy to driving a huge oil tanker as there is a time lag between turning the wheel and actually seeing the ship changing course.

"There is danger that tugging on the wheel before they have had an opportunity to find out whether the previous lot of tugs have worked," he explained.

However, Mr Baxter commented that Mervyn King, chairman of the MPC, had wanted to carry out more quantitative easing last month, so this could mean the Bank ends up printing more money if he gets his way.

In last month's meeting, the committee opted to leave the base rate of interest at 0.5 per cent.

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