London: Bank of England and European Central Bank yesterday decided to leave their main interest rates untouched at record low level.
The BoE also decided to keep the level of stimulus cash that the BoE has pumped into the economy at £375 billion (Dh2.08 trillion, $571 billion, €431 billion), said a statement published following its August meeting.
“The Bank of England’s Monetary Policy Committee (MPC) today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 per cent,” the statement said.
“The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.”
Clues to the reasons behind Thursday’s decisions are expected to be included in the BoE’s next quarterly report containing its inflation and economic growth forecasts and that is due to be published on Wednesday. The European Central Bank has left its benchmark interest rate unchanged at a record low of 0.5 per cent as it holds out hope that the recession in Europe will soon end.
Lagging economy
The bank held off on further efforts to stimulate Europe’s lagging economy at a meeting of its 23-member governing council in its headquarters in Frankfurt, Germany.
The economy of the 17 European Union members that use the euro shrank 0.2 per cent in the first quarter, the sixth quarterly decline in a row. Lower rates could in theory stimulate growth by lowering borrowing costs for banks, businesses and consumers.
But recent indicators such as surveys of purchasing managers have raised hopes that the recession in the group of 17 European Union countries that use the euro has already bottomed out and could soon be returning to growth. Some economists think it could either show flat or slight growth for the April-June period or in the July-September quarter.
