Page last updated at 12:34 GMT, Thursday, 10 December 2009

UK interest rate remains at 0.5%

Bank of England building
The Bank is pumping 200bn of newly created money into the economy

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).

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.

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.

'Slow and protracted'

Responding to the decision, some analysts believe interest rates could remain at the current level for the foreseeable future.

Interest rates

"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 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.



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SEE ALSO
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