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UK interest rate remains at 0.5% | UK interest rate remains at 0.5% |
(about 2 hours later) | |
The Bank of England has held UK interest rates at the record low of 0.5% in a widely-expected move. | The Bank of England has held UK interest rates at the record low of 0.5% in a widely-expected move. |
It also announced no changes to its programme of pumping newly-created money into the economy - so-called quantitative easing (QE). | It also announced no changes to its programme of pumping newly-created money into the economy - so-called quantitative easing (QE). |
In November, the Bank of England said it would inject another £25bn, taking the total planned under QE to £200bn. | In November, the Bank of England said it would inject another £25bn, taking the total planned under QE to £200bn. |
The Bank cut interest rates to 0.5% in March in an attempt to boost the recession-hit economy. | The Bank cut interest rates to 0.5% in March in an attempt to boost the recession-hit economy. |
Under QE, the Bank of England prints money to buy assets from banks and other companies to stimulate the economy. | Under QE, the Bank of England prints money to buy assets from banks and other companies to stimulate the economy. |
The bank is expected to wait until the current QE programme runs out in January before considering whether it should be expanded. | The bank is expected to wait until the current QE programme runs out in January before considering whether it should be expanded. |
'Slow and protracted' | 'Slow and protracted' |
Responding to the decision, some analysts believe interest rates could remain at the current level for the foreseeable future. | Responding to the decision, some analysts believe interest rates could remain at the current level for the foreseeable future. |
"With sustainable, significant recovery very far from guaranteed, any policy tightening still looks a long way off and we expect interest rates to stay down at 0.5% until at least late 2010. Indeed, the Bank of England could very well delay raising interest rates until 2011," said Howard Archer at Global Insight. | "With sustainable, significant recovery very far from guaranteed, any policy tightening still looks a long way off and we expect interest rates to stay down at 0.5% until at least late 2010. Indeed, the Bank of England could very well delay raising interest rates until 2011," said Howard Archer at Global Insight. |
The Bank of England recently warned that the recovery would be "slow and protracted" and that it would take months for the full impact of its policies to be felt. | The Bank of England recently warned that the recovery would be "slow and protracted" and that it would take months for the full impact of its policies to be felt. |
The British Chambers of Commerce have accused the Bank's Monetary Policy Committee and the government for not going far enough to help recovery. | The British Chambers of Commerce have accused the Bank's Monetary Policy Committee and the government for not going far enough to help recovery. |
"One critical factor delaying our exit from recession is the difficulties creditworthy small and mid-sized firms face trying to obtain adequate finance. This issue must be addressed quickly to ensure that a recovery gets under way," said Chief Economist David Kern. | "One critical factor delaying our exit from recession is the difficulties creditworthy small and mid-sized firms face trying to obtain adequate finance. This issue must be addressed quickly to ensure that a recovery gets under way," said Chief Economist David Kern. |