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Interest Rates hold at 0.5%

The Bank of England have kept interest rates unchanged at 0.5% and have no plans to expand its programme of quantitative easing.

Quantitative easing has previously been used by the Bank to boost the economy, and currently stands at £325 billion.

The 0.5% interest rate is a record low, which has remained unchanged for more than three years.

Richard Driver, an analyst for Caxton FX believes that today’s monetary policy decision is likely to ahve been a closer call than in any previous meetings, in the belief that many players would have priced in a June QE call over the past week.

He commented: “The sounds out of the MPC just haven’t been dovish enough to indicate another round of easing was imminent, though the weak UK data over recent weeks arguably would have justified it.

“This morning’s UK services figure could well have firmed up the resolve of some of the MPC’s more dovish-leaning members and the BoE is probably holding more QE back as a fire extinguisher if the worst case scenario emerges from the eurozone debt crisis.”

He also believes that the majority of the MPC seems content that the last round of QE is still feeding through and providing stimulus, they look happy to wait and see for now.

This was posted in Bdaily's Members' News section by Ruth Mitchell .