Bank of England holds rates

The Bank of England held interest rates today for the third month in a row.

Policymakers also decided against further expanding the institution’s £125 billion ’money-printing’ quantitative easing programme.

The lending rate has been held at 0.5 per cent - an all-time low in the Bank’s 300-year history - since March.

Quantitative easing has been expanded once from its original size of £75 billion and the programme is still expected to be wound up this summer.

The aggressive policy actions from the Bank have come about due to the sharp downturn in the real economy.

Keeping interest rates low and printing money is aimed at boosting lending flows from banks and staving off the threat of the UK becoming caught in a deflation trap.

A poll conducted earlier this week saw analysts unanimously predicting a rate hold.

Vicky Redwood, UK economist at Capital Economics, commented: ’I think that [an increase in rates] probably won’t be for at least another year or maybe even 18 months.

’I think we’ll need to see signs that the economy is getting back on its feet ... before it starts to raise interest rates again.’

Arek Ohanissian, economist at centre for economic and business research, added: ’We see [the rate] staying on hold ... we are estimating that they won’t start pushing it up until the first or second quarter of 2010.’ADNFCR-2318-ID-19202778-ADNFCR