Interest rates set to stay at 0.5% as triple dip looms

POLICYMAKERS gather for the first interest rates decision of the year this week amid mounting fears that Britain is heading for a triple dip recession.

Members of the Bank of England’s nine-strong Monetary Policy Committee (MPC) meet after a gloomy start to 2013 following figures suggesting the dominant services sector contracted in December for the first time in two years.

With manufacturing the only bright spot so far in December after Markit/CIPS survey data also pointed to a poor performance from the construction industry, some experts believe the UK economy slipped into reverse in the fourth quarter.

Markit’s survey data points to a 0.2% contraction in the final three months of 2012. The very real risk that the first quarter of this year may not prove much better could see the economy head for a so-called triple dip.

The MPC is expected to remain in “wait and see” mode this month and potentially some months to come.

Economists predict interest rates will be held at 0.5% for the foreseeable future.