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June 10, 2010

Bank of England keeps rates steady

by Richard Kilner

Story link: Bank of England keeps rates steady

The Monetary Policy Committee of the Bank of England has announced that it is to keep the British interest rate at 0.5%.

The decision keeps unchanged the lowest ever interest rate in the central bank’s existence, and also means that the quantitative easing asset purchase scheme remains at its present level of £200bn.

The move was widely expected, as, although inflation has been increasing, there was no strong suggestion that rates would rise.

In addition, the Coalition Government’s emergency Budget will be held on 22 June, and the Bank of England may well have wanted to keep things steady until they could assess the changes that are presented in the Budget.

Interest rate rises may occur later in the year, however, if the OECD’s calls for such changes are met.

The influential thinktank called for rates to rise during 2010 last month, citing the need to combat rising inflation.

The decision comes on the same day that New Zealand’s central bank increased rates by 25 basis points, to 2.75%.

 

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