5
Jun
Interest Rates latest....
The Bank of England has held interest rates at a record low of
0.5 per cent.
Rates have plummeted from 5 per cent last October and the Bank's
Monetary Policy Committee had been expected to keep the level
unchanged.
Meanwhile, the BoE said it will maintain its £125 billion
quantitative easing (QE) programme - effectively printing
money.
"The scale of the programme will be kept under review," the Bank
said.
Rate-setters have hinted that further stimulus may be necessary and
they have permission from Chancellor Alistair Darling to create
another £25 billion under QE if needed - to a £150
billion initial limit.
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.
The Bank is charged with keeping inflation at 2 per cent and its
benchmark, the Consumer Prices Index (CPI), slid to 2.3 per cent
from 2.9 per cent in April.
The MPC expects CPI to fall well below the 2 per cent target later
this year, but will also be wary of the deflationary impact of the
pound's recent strength, which could act as a further drag.
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."