Tuesday 6 December 2016

Bank of England leaves interest rates at historic 0.5pc low

Published 04/06/2015 | 12:23

Mark Carney, the governor of the Bank of England gives the bank's quarterly GDP and inflation forecasts at the Bank of England in London, February 12,. 2015. The Bank expects stronger growth on the back of lower oil prices but sees little need to raise interest rates this year and could even cut them if inflation proves weaker than expected. REUTERS/Pool/Antony Devlin (BRITAIN - Tags: BUSINESS POLITICS)
Mark Carney, the governor of the Bank of England gives the bank's quarterly GDP and inflation forecasts at the Bank of England in London, February 12,. 2015. The Bank expects stronger growth on the back of lower oil prices but sees little need to raise interest rates this year and could even cut them if inflation proves weaker than expected. REUTERS/Pool/Antony Devlin (BRITAIN - Tags: BUSINESS POLITICS)

Bank of England left interest rates on hold today in its first policy decision since official figures showed inflation turning negative.

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Ultra-low inflation has pushed back expectations of when the Bank will start to raise rates, which have remained at 0.5pc for more than six years, while the latest economic data appear to have killed off any chance of a hike coming soon.

Closely-watched figures from the dominant services sector yesterday signalled a sharp slowdown in growth in May, dampening hopes that the pace of the recovery could bounce back in the second quarter after a weak start to the year.

Today's decision also saw the Bank leave the scale of its money-printing quantitative easing (QE) programme unchanged at £375bn.

It comes a day after the European Central Bank left its interest rate on hold at 0.05pc and said its own €1.1 trillion stimulus programme was helping to support a modest recovery in the eurozone.

The Bank of England announcement comes after official figures showed Consumer Price Index (CPI) inflation fell to minus 0.1pc in April, in line with expectations.

It marked the first time inflation turned negative in more than half a century.

Reuters

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