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BoE holds rates at record 0.5pc low

Interest rates were left unchanged at 0.5pc by the Bank of England yesterday, as the Monetary Policy Committee (MPC) continued its policy of keeping the price of money at record lows to stimulate the flagging economy.

Members of the MPC said that they intended to continue with the £200bn (€222bn) programme of quantitative easing, which is aimed at pumping cash into the financial system until next month.

The decision by the MPC was as expected, with Britain's economy recovery remaining fragile.

Modestly upbeat economic data means that the UK is expected to have come out of its 18-month-long downturn in the fourth quarter of 2009, with growth expected at 0.4pc.

The central bank's statement was almost identical with its December statement.

The MPC said that it voted to maintain rates at 0.5pc and that it voted to continue with the programme of quantitative easing.

The committee made no further comments, other than to say that the £200bn quantitative easing programme is due to finish next month.

Howard Archer, the chief UK and European economist of IHS Global Insight, said that the MPC was always likely to remain in "wait-and-see mode", until the fourth-quarter figures for economic growth were published at the end of the month.

Describing February as "a key month", Mr Archer said that he nevertheless expected the bank to leave rates on hold then, but signal "a pause" in the quantitative easing programme.

Ian McCafferty, chief economic adviser at business lobby group CBI, said "we're not surprised" given that "recovery in the UK is likely to be slow and drawn out, similar to that following the 1980s recession" with "sub-par growth" continuing into 2011.

Lee Hopley of manufacturer's organisation EEF said that "the MPC is right to stick (leaving rates unchanged) until the economic picture becomes clearer".

Irish Independent