Bank of England holds UK interest rate, quantitative easing plan

09 December 2010 12:00  [Source: ICIS news]

LONDON (ICIS)--The Bank of England held UK interest rates at a record low of 0.5% on Thursday for the 21st consecutive month.

The Monetary Policy Committee (MPC), at its final meeting of 2010, also left its £200bn ($317bn, €238bn) quantitative easing programme unchanged following stronger-than-expected economic growth and an improved performance in the manufacturing sector.

The bank voted to maintain its monetary policy stance until a clearer economic picture emerged, as it felt the UK recovery was still fragile and expected a slowdown in economic growth.

However, there has been growing disagreement among members of the MPC, and decision makers have come under growing pressure to provide more support to boost the economy and to launch another phase of quantitative easing amid fears of stagnant growth.

The bank has also been pressured to raise interest rates to calm inflation, which currently stand at 3.2% – well above its 2% target.

The recession forced the bank's MPC into a series of interest rate cuts, which has seen rates fall from 5.5% in October 2008 to the current level, which was set in March 2009.

($1 = €0.75, €1 = £0.84)

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By: Franco Capaldo
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