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Base rate remains at 0.5%

Base rate remains at 0.5%

Category: Economy

Updated: 05/04/2012
First Published: 05/04/2012

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 It is now over 6 months old so the content may be out of date.

There was no surprise announcement from the Bank of England today, as it was confirmed that interest rates will remain at 0.5%.

The measure has remained at the historic low since March 2009, the Monetary Policy Committee announced after its monthly meeting.

The MPC also said it would not be increasing the size of the quantitative easing initiative 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.

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.

Minutes of the meeting released later this month will show how the group voted.

In the March meeting, two members of the MPC – Adam Posen and David Miles – voted to increase the size of QE by another £25 billion to £350 billion, but were outvoted by the remaining seven members.

The group was in complete agreement that rates should remain at 0.5%, however:

"The Monetary Policy Committee's decision to leave the Bank Base Rate unchanged for the 37th consecutive month was widely expected throughout the industry," said Chris Parrish, group treasurer at Yorkshire Building Society.

"Most economic commentators concur that the Base Rate is unlikely to rise this year.

"Despite Base Rate remaining unchanged at 0.50%, some lenders have announced that they will be increasing their Standard Variable Rates over the coming weeks and more may follow, and it's important for customers affected to review their mortgage arrangements."

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