BOE holds interest rates at 0.5%
Rate-setters held back from further aid for the economy today as the Bank of England paused for breath in its battle against recession.
The Monetary Policy Committee (MPC) held interest rates at their 0.5% record low, with no increases in its £125bn (€144bn) programme to boost the money supply after its two-day meeting.
“The scale of the programme will be kept under review,” the Bank said.
The move could signal the Bank is in “wait and see” mode as it judges the strength of possible green shoots in the economy, following better news from many industry surveys and the housing market.
Interest rates have plummeted from 5% last October and the Bank has embarked on so-called quantitative easing (QE) – effectively printing money – in unprecedented efforts to get the economy moving.
At the Bank’s last inflation report, Governor Mervyn King said there were some “promising signs” but warned of a “relatively slow and protracted” recovery for the economy.
Rate-setters have also hinted that further stimulus may be necessary and they have permission from Chancellor Alistair Darling to create another £25bn (€28.9bn) under QE if needed – to a £150bn (€173bn) initial limit.
Ian McCafferty, chief economic adviser to the CBI business group, said: “There are some encouraging, if tentative, signs that the QE programme is reducing the downside risk to the economy, but monetary and lending conditions remain fragile.
“The Bank is likely to need to continue to use the QE tool in coming months.”
