Base interest rate reassures investors Go compare with our comparison table

Base interest rate reassures investors

11 December 2009 / by Rebecca Sargent

The Bank of England's decision to hold the Base rate at 0.5 per cent for the tenth consecutive month has boosted investor confidence, The Share Centre has claimed.

Commenting, Joshua Raymond, market strategist at City Index said: "European markets gained on Thursday after three days of weaknesses with investors gaining in confidence after the Bank of England decided to keep interest rates on hold and maintain quantitative easing levels."

According to Mr Raymond, UK banks led the way for bargain hunting investors: "The banks have led today's gains with RBS and Lloyds both firmly in demand," he said.

Adding: "The UK banking sector has bounced from support levels and with RBS shares off 48 per cent and Lloyds shares off 28 per cent from their August highs, the bargain hunters are being encouraged to pick up both stocks from their lows."

Meanwhile, the Base rate decision caused no surprises amongst economists, Ian McCafferty, chief economic advisor at the CBI said: "It's not a surprise that the Bank has taken no new action, as the latest round of quantitative easing announced last month is due to continue until February.

"Economic growth will be anaemic at best across 2010, so the Bank will have to continue looking to monetary policy levers for some time yet, and interest rates are likely to remain low for some time."

© Fair Investment Company Ltd

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