The Bank of England kept its key interest rate at a record low level of 0.50 percent on Thursday as Britain struggles to ensure economic recovery. "The Bank of England''s Monetary Policy Committee today voted to maintain the official bank rate paid on commercial bank reserves at 0.5 percent," the BoE said in a statement at the conclusion of a two-day meeting.
The BoE also kept its emergency stimulus programme at £275 billion (322 billion euros, $438 billion). The central bank''s key interest rate has stood at 0.50 percent since March 2009, when it also began injecting £200 billion into the economy under a policy known as quantitative easing. At its meeting last month, the BoE took fresh stimulus measures by announcing that it was increasing QE by £75 billion. The bank said on Thursday that it expects the new cash injection to take another three months to complete. The bank''s latest policy decisions come as it prepares to publish new inflation and growth forecasts on Wednesday. Minutes from this week''s meeting will meanwhile be published on November 23.
Although Britain''s economy grew faster than expected in the third quarter, its outlook remains clouded by the eurozone debt crisis, government cutbacks and high inflation. Gross domestic product - the combined value of all the goods and services produced in the economy - expanded 0.5 percent in the third quarter, the Office for National Statistics (ONS) said last week. Britain is also faced with high inflation, currently at a three-year peak on surging household energy bills.
Consumer Prices Index annual inflation raced to 5.2 percent in September, compared with a level of 4.5 percent in August, according to the ONS. The Bank of England''s main task is to use monetary policy to try and keep annual inflation close to 2.0 percent - far below the current level.