The announcement by the Bank of England that it is to keep the base rate and quantitative easing (QE) at the same level does not come as a surprise, it has been claimed.
Ian McCafferty, Confederation of British Industry chief economic adviser, stated that although the economy is stabilising there could still be problems in the future.
He added that zero interest rates, the sharp fall in the pound and the existing £200 billion QE package is already expanding the economy and that inflation has consistently surpassed expectations recently.
Mr McCafferty noted that as the economy recovers the Bank will have to consider returning to standard levels for monetary conditions, which could see an increase in interest rates in the summer months of the year.
The comments follow the statement by the Bank that inflation reached 2.9% in December - with the rise accounted for by the hike in petrol prices and the reduced VAT rate being returned to its normal standing of 17.5%.
Base rates and quantitative easing stay at same level
