Responsible for making all decisions concerning the bank rate, the Monetary Policy Committee (MPC) of the Bank of England has now voted to maintain the current interest rates at 0.1 percent. The vote was unanimous.
The initiative is an outcome of the bank’s official meeting held on Wednesday, May 5, and it was accompanied by a prediction for a far stronger recovery than previously indicated.
The Bank of England commented in a recent statement:
“Global GDP growth is likely to have slowed in 2021 Q1 as Covid-related restrictions weighed on economic activity, although growth appears to have been stronger than expected in the February Report.”
However, it added that while COVID-19 vaccination programmes are progressing and picking up the pace in multiple countries around the world, the recent rise in new coronavirus cases significantly increasing in other economies, notably India, had led to more rigid restrictions.
Some UK financial experts commented that the move to not lower base rates was wise and would assist in stabilising the country’s economy. However, others noted that interest rates that were consistently low were unlikely to be great for savers, as combined with a modest rise in inflation, it could result in a loss of value for savings.
The Bank of England’s MPC consists of nine members in total – the Governor; three Deputy Governors for Financial Stability, Markets and Banking and Monetary Policy; the Chief Economist; and four external committee members, who are appointed by the Chancellor of the Exchequer.