World Economy

BoE Holds Back Interest Rate

BoE Holds Back Interest RateBoE Holds Back Interest Rate

The Bank of England on Thursday voted to keep its main interest rate at 0.50 percent, opting for stability in its last meeting before next month’s British general election.

As well as keeping the rate at a record-low level, policymakers decided to maintain the level of quantitative easing (QE) cash stimulus at £375 billion ($556 billion), the BoE said in a statement at the conclusion of its monthly meeting, AFP reported.

“The Bank of England’s Monetary Policy Committee (MPC) at its meeting today voted to maintain Bank Rate at 0.5 percent,” a statement said.

“The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.”

  Fastest Growth

Britain saw the fastest growth among major advanced economies last year and is expected to expand by as much as 3 percent this year, despite a possibly weaker start to 2015. Pay growth is also starting to pick up.

But at the same time, inflation has fallen sharply on the back of the slump in global oil prices. It touched zero in February, easing pressure on the BoE to start weaning the economy off its very low borrowing costs.

All the Bank’s rate-setters have voted to keep rates on hold since the start of the year because of the inflation slump.

But its chief economist Andy Haldane surprised investors last month by saying a rate cut was just as probable as a rate hike because inflation might not rise as forecast over the coming months.

The BoE forecast in February that inflation would touch its 2 percent target in two years’ time.