Interest rate and quantitative easing on hold as Bank of England sticks to its guns


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The Independent Online

The Bank of England today decided against giving a further boost to the British economy in Governor Sir Mervyn King’s penultimate meeting at the helm.

The monetary policy committee voted to keep its money printing programme on hold at £375 billion and interest rates at a record low of 0.5 per cent, as expected, despite rate cuts from European Central Bank and Reserve Bank of Australia in the past week.

Sir Mervyn, who hands over to Canadian Mark Carney in July, is one of a trio on the nine-strong committee voting for more quantitative easing. A main point of interest when the minutes of the meeting are published in two weeks will be whether he kept  up his call  in the light of an improving economy.

The UK avoided a triple-dip recession in the first three months of the year and the Bank’s Consumer Prices Index is well above the 2 per cent target at 2.8 per cent, although oil prices have recently eased to soften the inflation outlook.