Base rate kept at 0.5%

The Bank of England has voted to keep its benchmark interest rate at the historic low of 0.5 per cent.

This is the sixth consecutive month the Bank’s Monetary Policy Committee (MPC) has voted to keep the rate at this level.

In addition, the Bank voted to continue with its £175 billion asset purchase programme, also known as quantitative easing.

First rolled out with £125 billion in March, quantitative easing is the modern-day equivalent of printing money and involves the Bank buying back assets in exchange for bonds.

Then last month, the MPC announced plans to expand this programme by a further £50 billion.

In a statement announcing the latest interest rate decision, the Bank said: ’The committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.’

Analysts believe that interest rates are unlikely to rise in the near term.

’With the economy still weak and inflation projected to remain well below target for a prolonged period of time, interest rates are not heading up any time soon,’ commented Hetal Mehta, senior economic adviser to the Ernst & Young Item Club.
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