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Bank of England keeps interest rate at record-low 0.5%

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(Globalpost/GlobalPost)

The Bank of England on Thursday voted to leave its main lending rate at a record-low level of 0.50 percent and refrained from pumping out more new cash to help stimulate Britain's recession-threatened economy.

"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 brief statement at the conclusion of a regular monthly meeting, whose minutes will be published on April 17.

Thursday's outcome had been widely predicted by markets, which expected the BoE to wait for official data later this month to see whether Britain's economy has re-entered a period of recession.

With Britain struggling to sustain economic recovery following the 2008 global financial crisis, the BoE's main lending rate has stood at 0.50 percent for more than four years.

The central bank has meanwhile pumped out £375 billion of new money under its quantitative easing (QE) stimulus programme since March 2009.

"Although the Monetary Policy Committee (MPC) left policy on hold again today, we suspect that the decision was still a close one," said Samuel Tombs at the Capital Economics research group.

BoE governor Mervyn King, who shortly steps down to be replaced by Canadian central bank chief Mark Carney in July, has in recent months unsuccessfully called for an additional £25 billion of stimulus along with two other of the MPC's nine members.

"It is likely that BoE governor King, along with Paul Fisher and David Miles voted to expand QE by a further £25 billion" at Thursday's meeting, said ING Bank analyst James Knightley.

Recent official data revealed that British gross domestic product (GDP) shrank 0.3 percent in the fourth quarter of 2012 compared with the previous three months.

Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years.

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http://www.globalpost.com/dispatch/news/afp/130404/bank-england-keeps-interest-rate-at-record-low-05-0