Rate prediction made ahead of Bank of England meeting

Date: 8th September 2009

The Bank of England is unlikely to announce a change to its monetary policy on Thursday, a Defaqto economist has predicted.

Michael Baxter said that rates would stay at their current level of 0.5 per cent for another month.

However, the expert also said that an increase to the Bank's £175 billion quantitative easing policy remained a distant possibility.

The scheme, the modern-day equivalent of printing money, has been increased since its original planned level of £50 billion from March.

Mervyn King, the governor of the Bank, voted for an increase to £200 billion last month.

A loose rates policy and quantitative easing is aimed at increasing the flow of money around the UK economy, helping to counteract some of the effects of the credit crunch.

This is in theory good news for partnerships and other small businesses, who have largely struggled with getting affordable loan financing over recent months.

However, some economists have warned that the policy, in particular the quantitative easing, could store up inflation problems for the future.

Mr Baxter said: "I think it will be a surprise if they did anything, I don't see the rate of interest going up and I'd be surprised if they go for any quantitative easing although Mervyn King wanted us to do more last month so if he has his way maybe they will do some more."