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Bank announces another rate freeze

Bank announces another rate freeze

Category: Economy

Updated: 08/03/2012
First Published: 08/03/2012

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 It is now over 6 months old so the content may be out of date.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 has announced that interest rates are to be frozen at 0.5%, some three years after it reduced the measure to its current record low.

Following the Monetary Policy Committee's – the Bank's rate-setting group – monthly meeting, it was announced that the Bank of England base rate of interest would remain at 0.5% once again.

It was also announced that the Bank's programme of quantitative easing (QE) would not be enlarged this month.

In February, the bank injected another £50 billion into the economy, taking the size of the QE programme so far to £325 billion.

Minutes released later this month will reveal how the MPC's nine members voted, with the possibility that one or more may have voted to increase the QE initiative yet further.

Ian McCafferty, the chief economic adviser at the CBI said that the decision was no surprise, but noted that '
with economic conditions fragile and the level of uncertainty high, monetary policy decisions are still likely to be finely-balanced'.

The chief executive of the British Chambers of Commerce said that while the association supported the recent expansion of QE, there is concern that the funds are not finding their way to businesses and that the benefits to the wider economy have been 'limited'.

"Despite the increase, mortgage rates have risen in recent days, which is clearly a problem," he added.

"We urge the Chancellor to address these issues as soon as possible by introducing an effective credit-easing scheme."

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