London: The Bank of England on Thursday voted at a regular policy meeting to hold its reference interest rate at a record-low 0.50 per cent, where it has stood for four years, and opted against increasing its cash stimulus programme to boost a British economy on the brink of recession.
“The Bank of England’s Monetary Policy Committee today voted to maintain the official bank rate paid on commercial bank reserves at 0.5 per cent,” the BoE said in a statement following a two-day gathering.
“The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion” ($589 billion, €434 billion).
Analysts had said the decision over stimulus, or quantitative easing (QE), had been on a knife-edge with Britain at risk of its third recession since 2009.
Minutes of the latest meeting, explaining the reasons behind the BoE’s latest monthly policy decisions, are to be published on March 20, the central bank said.
“The Bank of England today kept quantitative easing levels on hold... giving the pound sterling a timely boost,” said Joshua Raymond, chief market strategist at City Index trading group.
“The move by the MPC was no doubt helped by the much stronger than expected UK services data earlier this week, which accounts for two-thirds of the UK economy and rose at its fastest pace in five months.”
Minutes of the central bank’s meeting in February showed that its outgoing governor Mervyn King unsuccessfully advocated for #25 billion worth of more stimulus.
But in the end the BoE’s nine-member Monetary Policy Committee voted 6-3 to keep its QE cash stimulus level on hold.
Under quantitative easing, the Bank of England creates cash that is used to purchase assets such as government and corporate bonds with the aim of boosting lending and in turn economic activity.
QE can stoke inflation however as it is tantamount to printing money.
