The Bank of England announced today that interest rates would remain on hold at 0.5%, prompting fears that fixed rate mortgages might increase, as funding costs stagnate and a number of lenders withdrew deals.
The banks statement came shortly after their European counterpart the ECB cut its interest rate by 0.25% to 1%.
With interest rates at an all time low, but the economy still cooling rapidly, the bank also announced an extension of £50 billion to its quantitative easing program. This brings the package to £125 billion, aimed at increasing bank lending through the availability of cheaper funds.
The Monetary Policy Committees decision was largely expected, as a number of recent surveys from the manufacturing and service sectors indicated a slowdown in the rate of economic decline.
The statement accompanying the Bank’s announcement was guarded but did say “Surveys at home and abroad show promising signs that the pace of decline has begun to moderate.
However, not all recent figures have been a cause for optimism as the latest unemployment figures showed the numbers out of work had climbed to 2.1 million.