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No change to BoE base rate

No change to BoE base rate

Category: Economy

Updated: 07/06/2012
First Published: 07/06/2012

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 It is now over 6 months old so the content may be out of date.

There were no surprises when the Bank of England announced today that the base rate of interest would remain unchanged for another month at least.

The measure remains at the historic low of 0.5%, where it has been for over three years - since March 2009.

The Monetary Policy Committee (MPC) also announced that it would not be increasing the size of the quantitative easing (QE) programme this month.

In February, the Bank injected £50 billion into the economy, taking the size of the QE initiative to £325 billion.

The QE initiative works by the Bank of England buying up bonds from the Government and the banks, with the end result being that funds trickle down into consumer and business lending.

"Both official and survey data continue to present a mixed picture of the economy, so this decision would have been a tricky one," commented Anna Leach, the Confederation of British Industry's head of economic analysis.

"It seems that a 'wait and see' position has been adopted for the moment. The ongoing crisis in the Euro area will continue to put pressure on fragile business conditions for the foreseeable future. But we still expect the UK economy to improve modestly later in the year, with further falls in inflation providing some support to family incomes."

Later this month, minutes of the MPC's meeting will be released, showing how the group voted.

During the MPC's last meeting in May, it was revealed that all nine members voted to keep interest rates at 0.5%, while only one member voted to boost the QE initiative by a further £25 billion to a total of £350 billion.

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