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Bank holds rates at 0.5%

Bank holds rates at 0.5%

Category: Economy

Updated: 04/08/2011
First Published: 04/08/2011

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There were no surprises from the Bank of England at noon today, as it announced that the bank rate will remain on hold.

The announcement follows the monthly meeting of the Bank's group of rate setters, the Monetary Policy Committee (MPC).

It means that there has been no change in the measure for 29 months, with the last revision coming in March 2009, when the MPC cut rates from 1.0% to 0.5%.

The MPC also voted not to inject any more money into the economy through its quantitative easing (QE) programme.

There have been various estimates about when the rate will rise, with some predicting that it will remain on hold until 2014.

Many analysts and experts have a more conservative outlook, predicting that it will rise in 2012.

Minutes released later in the month will show whether there was a split in opinion amongst the members of the committee.

Against a backdrop of inflation that is more than double the Government's 2.0% target, two MPC members voted to increase rates last month. There was also one vote to increase the QE programme.

" UK businesses support the decision by the MPC to leave interest rates and the quantitative easing programme unchanged," David Kern, chief economist at the British Chambers of Commerce (BCC), said.

"Given the fragility of the UK recovery, the acute pressures facing businesses and individuals, and the clear risks of a slowdown in the global economy, we expect the Committee to maintain interest rates at their current low level at least until the early months of 2012"

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