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LONDON: The Bank of England on Thursday voted to hold its key interest rate at 0.50 per cent with Britain at risk of fresh recession and three years after it slashed borrowing costs to the current record-low.
The central bank also maintained the level of its asset purchasing scheme aimed at boosting lending among commercial banks - at £325 billion ($514 billion) - the BoE said in a statement."The Bank of England's Monetary Policy Committee (MPC) on Thursday voted to maintain the official bank rate paid on commercial bank reserves at 0.5 per cent," the statement said after a two-day policy meeting.
"The committee also voted to continue with its programme of asset purchases totalling £325 billion financed by the issuance of central bank reserves. The committee expects the announced programme of asset purchases to take another two months to complete. The scale of the programme will be kept under review." Markets must wait until March 21 to see the minutes of the meeting and the reasons behind the latest policy decisions by the MPC's nine members, including regarding the asset purchasing programme, or quantitative easing (QE).
"Perhaps the most remarkable thing about MPC announcement is that it marks the three-year anniversary of the start of quantitative easing and Bank Rate reaching an historic low of 0.5 per cent," said HSBC analyst Simon Wells.
"In March 2009, few people would have imagined that three years later asset purchases would be heading toward £325 billion and that Bank Rate would still be 0.5 per cent. Not since the 1940s has the UK's main policy rate been so stable and it has never been this low."
Under QE, the central bank creates new cash that is used to purchase assets such as government and corporate bonds in the hope of giving a boost to lending and economic activity. The Bank of England began QE three years ago by injecting the economy with £200 billion.-AFP
