Yesterday (Thursday 5th November) saw the usual monthly meeting of the Bank of England’s Monetary Policy Committee (MPC) and there were no surprises at all when it was announced that the base rate of interest for loans and savings would remain constant at 0.5 per cent for yet another month.

This is now the eighth month in a row where the base rate has not changed and experts believe that the rate is likely to stay at this same level for some time to come yet. It was hoped that the UK would exit recession by the end of the third quarter of this year, but since this has not happened, the MPC has warned that we are likely to be in for a long and slow recovery.

The MPC also extended its programme of quantitative easing yesterday, by introducing an additional £25 billion into the UK economy in an attempt to get banks to start offering loans once again, both on a personal loan basis, but in particular new business loans. The quantitative easing programme, which was started earlier this year with £50 billion, has now been extended to reach a total amount of £200 billion, although many experts believe that the MPC should have gone further and extended the scheme by £50 billion instead of just £25 billion.

Azad Zangana, an economist at Schroders, commented on the extension of the quantitative easing programme. He said “The market was expecting an additional £50 billion in purchases and so the surprise has lifted sterling and promoted a small sell off in gilts. The UK’s failure to exit recession in the third quarter will have swayed the monetary policy committee’s decision to extend quantitative easing, despite recent strong signs of activity from private business surveys and a pick up in house prices.”