The news is expected to disappoint manufacturers as the slowdown in the US economy gathers pace. A US Federal Reserve survey reported yesterday that economic growth slowed across most of the US last month.
Commentators believe the MPC’s decision to avoid last month’s quarter point cut came in response to yesterday’s budget tax cuts and benefits worth Pounds 1.57bn targeted at consumers.
Economists expected the move, as the nine-member committee will need time to analyse the effects of the chancellor’s 2001/2 budget before further decisions on cuts can be announced. The MPC is also concerned that UK consumer spending is still rising too fast.
But, the UK’s economic outlook remains positive, with strong retail sales reported in February and unemployment hitting its lowest levels for two decades, with the MPC expected to continue cuts in interest rates after the general election in the spring.
Kate Barker, chief economist at the Confederation of British Industry, said: ‘Firms will hope that this is only a pause in rate cuts, not the end of the story. With the US slowdown clouding the outlook for global growth, many companies face another difficult year.’
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