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Bank of England holds firm on base rate

Bank of England holds firm on base rate

Category: Economy

Updated: 13/01/2011
First Published: 13/01/2011

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 It is now over 6 months old so the content may be out of date.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 base rate of interest will remain at its historic low of 0.5% for at least another month, the Bank of England has revealed.

The Bank has also decided to maintain the £200 billion programme of quantitative easing (QE) at its existing level.

Base rate dropped to 0.5% in March 2009 in order to help boost the economy.

While the move has meant lower mortgage repayments for homeowners, savers have had to contend with low interest rates on their savings accounts.

However, pressure has recently been growing for the Monetary Policy Committee to sanction a rise.

At the December meeting of the committee, a three way split occurred amongst the members as to the appropriate course of action to take.

Andrew Sentance voted to increase interest rates to 0.75%, while Adam Posen preferred to maintain rates but increase the size of QE by a further £50 billion to £250 billion.

All other seven members of the committee voted to maintain the size of the QE programme and leave interest rates at 0.5%.

The minutes of today's MPC meeting will be released later this month.

While savers will no doubt be disappointed by the lack of action, all is not lost.

There are still some competitive savings accounts out there if you know where to look.

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