Bank of England holds interest rate at record low

LONDON: The Bank of England on Thursday voted to keep its main interest rate at 0.50 percent for a sixth year running, as Britain balances deflation fears against steady growth.
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 ($572 billion, 517 billion euros), the BoE said in a statement at the conclusion of a two-day meeting.
“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.”
Minutes of the meeting, outlining reasons behind the decisions, will be published on March 18.
The BoE´s latest announcement comes as the European Central Bank, meeting in Cyprus, is set to update its economic forecasts and reveal details of its new bond purchase programme on Thursday.
After revealing its plans for QE in January, the ECB will focus on fleshing out the details of that stimulus programme rather than announcing any new measures, analysts said. “As expected, the Bank of England decided to leave its Bank Rate and Asset Purchase Facility target unchanged,” Barclays said in a note to clients.
“At the March MPC meeting today, we expect discussions to have been fairly similar to those in January and February... highlighting short-term downside risk to inflation but also, upside medium-term risks to activity and wages.
Inflation in Britain could turn negative and interest rates cut, Bank of England governor Mark Carney said last month, signalling fresh risks to the economy before the country´s general election in May.
The BoE could also expand its QE programme of pumping new money into the British economy, should it be needed, the Canadian national added.
The European Central Bank recently launched its own QE policy to combat deflation, or a prolonged period of falling prices, in the eurozone. Britain is not a member of the 19-nation bloc but counts the neighbouring eurozone as its biggest trading partner.