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Fiscal plan 'keeping interest rates low'

Posted on 13th Feb 2012 in Offshore Interest Rates


The decision by the Bank of England's Monetary Policy Committee (MPC) to hold the base rate of interest at a record low for another month has been defended by the Treasury.

A spokesman for the Treasury told the Press Association that the "credible fiscal plan" from the Conservative-Liberal Democrat alliance has helped interest rates to remain at 0.5 per cent.

Although there are fears the UK could be set to slip into recession once more, he added that the Office for Budget Responsibility had predicted there would be one quarter of negative growth in 2011.

The spokesman said: "The global economic outlook is certainly challenging but there are reasons to be optimistic: inflation is coming down [and] business surveys show the service and construction sectors strengthening."

Interest rates have stood at 0.5 per cent in the UK for three years, when the MPC decided to drop the base rate to a record low in a bid to support the economy through the recession.

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