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Base rate approaches three years at 0.5%

Base rate approaches three years at 0.5%

Category: Economy

Updated: 06/02/2012
First Published: 12/01/2012

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 It is now over 6 months old so the content may be out of date.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 base rate of interest is approaching three years at a historical low of 0.5% after the Monetary Policy Committee's (MPC) announcement at noon today.

The Bank of England's rate-setting committee confirmed that rates would remain at 0.5% after its monthly meeting.

The measure was last changed in March 2009, when the MPC cut rates from 1.0% to 0.5%.

Worries about the speed of the recovery in the UK economy have put any chance of a rise in rates on the back-burner, with some predicting that any increase may not come until 2014 or 2015.

The MPC also announced that it would not yet be pumping more money into the economy through its programme of quantitative easing, although some experts and economists think another injection of £50 billion could come by the spring.

The programme works by buying up bonds from banks and, to a lesser extent, Government, with the intention being the funds drip down into the wider economy.

Such a move would take the initiative up to the £325 billion mark.

Barry Naisbitt, chief economist at Santander , said that today's decisions were widely expected.

"It is the first meeting of a new year and, with the members of the MPC having voted to extend the quantitative easing programme by £75 billion in October and that programme still running, the general expectation was that the MPC would again make no policy changes," commented Mr Naisbitt.

"With the end of the quantitative easing programme and the February Inflation Report coming up, the MPC is likely to want to see how the economy is developing before making any further changes."

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