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Base rate held again

Base rate held again

Category: Economy

Updated: 08/10/2009
First Published: 08/10/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England base rate of interest has been frozen at 0.5 per cent for the seventh consecutive month, the Monetary Policy Committee (MPC) has announced.

With house prices seemingly improving and many other areas of the economy showing progress, the decision to maintain the current base rate was largely predicted by experts and analysts.

It means the rate has now been unchanged since it was cut from one per cent to 0.5 per cent in March. Twelve months ago, the measure was five per cent.

The Committee also voted to continue with its programme of assets purchase – know better as Quantitative Easing – designed to increase the flow of money through the UK economy.

The value of the programme has been maintained at £175 million and is expected to take another month to complete, although changes have not been totally ruled out, with the MPC saying the scale of the scheme will be kept under review.

"Today's no change decision may be a bit of a non event but there is at last some action back in the mortgage market," said Ray Boulger of John Charcol mortgage brokers.

"September saw the usual seasonal upturn and over the last few days we have at last started to see some real competition from lenders, albeit primarily for lower LTV business. Woolwich, Northern Rock, Abbey, Alliance & Leicester, Principality and Coventry have all announced cheaper deals this week, which is good news for borrowers."

The minutes of the MPC's meeting will be released on 21 October.

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