Bank holds interest rates again
Fri, 10 Jul 2009
The Bank of England's Monetary Policy Committee (MPC) has decided to hold interest rates at their record low of 0.5 per cent.
While this was a widely expected move, the MPC also chose against increasing the scale of its quantitative easing programme, which some economists had called for.
It has already committed to inject £125 billion into the economy through the purchase of government bonds and assets, but the British Chambers of Commerce recently proposed that this should be raised to £200 billion to kick-start the economy.
Commenting on the Bank's latest decision, Ian McCafferty, chief economic adviser at the Confederation of British Industry, said that with the economy and credit conditions still "very weak", the quantitative easing programme has further to run.
"That, rather than interest rates, is the MPC's main concern," he stated.
"After only five months, it is still too early to determine the effects on the wider economy. So, a further extension through the autumn is needed, and clear communication of the Bank's intentions throughout will be critical in order to prepare the markets."
Back in September 2008, the Bank's base rate stood at 4.5 per cent before a series of reductions over the winter months brought it down to 0.5 per cent.
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