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Fiscal austerity keeps onus on MPC to support economy

The MPC’s decision to leave interest rates on hold at 0.5% today – marking the 7th anniversary of rates being at this record low – was unsurprising given the softness of recent activity indicators and heightened uncertainty about the economic outlook. The combination of referendum uncertainty and fiscal austerity will keep rates on hold for a while yet – albeit not for as long as markets think.

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