Bank of England adds £25bn to QE

by Richard Kilner

Story link: Bank of England adds £25bn to QE

The Monetary Policy Committee (MPC) of the Bank of England has elected to retain the interest rate at 0.5%, the lowest in the institution’s history.

The rate retention was widely expected, and the Bank of England has also chosen to increase its programme of quantitative easing (effectively printing money) of asset purchases by £25bn, to £200bn.

The quantitative easing programme had been scheduled to end this month, having earlier been forecast to end in August when its scale was increased by £50bn.

The institution also predicted that inflation would overshoot the 2% target in the near future due to rising petrol costs and the return of VAT from its present, temporary level of 15% to its previous rate of 17.5%.

Generally, central banks are retaining interest rates at the low point they reached following global cuts during the financial crisis, but in Australia the Reserve Bank this month increased rates by 25 basis points for the second consecutive month.