Bank of England keeps rates at 0.5%

by Richard Kilner

Story link: Bank of England keeps rates at 0.5%

The Monetary Policy Committee (MPC) of the Bank of England has decided to hold the British interest rate at the historic low of 0.5%.

The MPC also elected not to enlarge the quantitative easing asset purchase scheme beyond its present scope of £200bn.

The decision to leave rates unchanged was widely expected, although recently debate has begun regarding whether or not they should be increased in the near future.

Last month the central bank was praised by World First’s Jeremy Cook for not increasing rates, a move that Cook asserted would prove detrimental to economic growth.

In May the OECD thinktank called for rates to increase during 2010, citing persistently above target inflation as grounds for higher interest rates.

At the time of the OECD’s call inflation stood at 3.7%, substantially exceeding the bank’s 2% inflation target.