Interest rate maintenance 'good for economic growth'

Maintaining the base rate of interest at its current level will help to promote recovery in the UK’s financial markets, it has been asserted.

Charles Davis, senior economist at the Centre for Economics and Business Research (CEBR), made his remarks after a report by the Organisation for Economic Co-operation and Development (OECD) showed that gross domestic product in the OECD area rose by 0.8 per cent in quarter three of 2009.

He stated that as well as keeping the Bank base rate at 0.5 per cent, other factors that could help boost the financial markets include tackling the budget deficit.

’If markets don’t see a clear and credible commitment to bringing down the deficit then, potentially, bond markets could react,’ Mr Davis added, noting that this could push up long-term interest rates and place pressure on the private sector.

The Bank’s Monetary Policy Committee is set to take its next decision on whether to raise, lower or maintain the base rate of interest on December 10th.ADNFCR-2318-ID-19484792-ADNFCR