MPC 'may not change interest rate'

Thursday, May 6th 2010

The UK could be affected by a rise in interest rates, which some predict may occur when the Monetary Policy Committee (MPC) meets on Monday (May 10th).

But Alan Clarke, UK economist at BNP Paribas, does not believe the levels are set to change.

He says this is down to uncertainty over the effect the election will have on fiscal matters.

"They won't know what the precise change in fiscal policy is going to be depending on which government [gets in] and they will do absolutely nothing," Mr Clarke stated.

On April 8th, the Bank of England's MPC decided to maintain the base rate at the record low of 0.5 per cent.

Mr Clarke revealed there is a certain level of discomfort concerning the "rather high" level of inflation, which was evident in recent minutes from an MPC meeting.

However, there is currently nothing much to be done about the near-term inflation, he added.