LONDON: The Bank of England said yesterday it had voted to keep its main interest rate at a record low 0.50 percent.
The central bank also said in a statement it had decided to maintain the level of cash stimulus pumping around the economy at £375bn ($636bn).
“The Bank of England’s Monetary Policy Committee (MPC) at its meeting today voted to maintain bank rate at 0.5 percent,” it said in a statement yesterday.
“The committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375bn,” it said in a statement.
Reasons for the decisions made at the two-day meeting will be given in the bank’s latest quarterly economic forecasts due on Wednesday. Minutes from the gathering will be published
on May 21.
Analysts said a backdrop of low inflation in Britain, whose economy is enjoying a solid recovery, would have convinced policymakers to sit tight and avoid rushing to hike the interest rate, which has remained at 0.50 percent for more than five years.
“While the strength of the housing market may have made for an animated discussion at today’s MPC meeting, the benign inflation outlook suggests that tighter monetary policy is still not a near-term prospect,” said Jonathan Loynes, chief European economist at the Capital Economics research group.
The Bank of England had last year vowed not to consider a rate rise until British unemployment fell to at least 7.0 percent, but was forced to adjust its “forward guidance” policy after the jobless total fell faster than anticipated.
Policymakers must now determine whether the BoE has absorbed all the spare capacity in the economy as it looks to keep inflation close to a 2 percent target, before moving to raise rates, which would boost savers but hit borrowers.
AFP
