Menu
06/08/2009
No Change For Interest Rate
The UK's interest rates has remained unchanged today as the Bank of England left the level set at 0.5%.
The Monetary Policy Committee's (MPC) second decision, to expand quantitative easing (QE) at the same time, underlines the caution among policymakers over the strength of the UK's recovery from recession despite recent positive signs.
The institution increased the scale of its 'quantitative easing programme' to boost the money supply by £50 billion to £175 billion.
Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically by increasing the credit in its own bank account.
It is used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to 'seed' the financial system with new money through what is know as quantitative easing.
Today's double initiatives come as official figures and surveys have each shown manufacturers and services firms are at last emerging from recession, while house prices have also risen.
Economists expect the UK to return to growth between July and September but problems in the banking sector could still restrain a recovery, and official estimates showed a disappointing 0.8% fall in output during the second quarter of this year.
However, in a statement explaining the surprise move, the Bank of England said the recession "appears to have been deeper than previously thought" but it said the "pace of decline has slowed" and business surveys suggested the low point in activity was "close at hand".
"Though there are signs that credit conditions may have started to ease, lending to business has fallen and spreads on bank loans remain elevated," it added.
The Bank said: "On the one hand, there is a considerable stimulus still working through from the easing in monetary and fiscal policy and the past depreciation of sterling.
"On the other hand, the need for banks to continue repairing their balance sheets is likely to restrict the availability of credit, and past falls in asset prices and high levels of debt may weigh on spending."
It added: "While some recovery in output growth is in prospect, the margin of spare capacity in the economy is likely to continue to grow for some while yet, bearing down on inflation in the medium term."
The news on QE came in an exchange of letters with Bank Governor Mervyn King with the Chancellor Alistair Darling. He agreed to them increasing the QE threshold to £175 billion as a result of this correspondence.
The MPC's caution underlines how a weak banking sector could yet weigh on recovery despite £6 billion in combined profits from HSBC and Barclays on Monday.
Lloyds Banking Group and nationalised Northern Rock have reported losses of £4 billion and £724 million respectively.
According to official estimates, the UK economy has now shrunk by 5.7% since the first quarter of 2008, over twice that of the early 1990s recession.
(BMcC/KMcA)
The Monetary Policy Committee's (MPC) second decision, to expand quantitative easing (QE) at the same time, underlines the caution among policymakers over the strength of the UK's recovery from recession despite recent positive signs.
The institution increased the scale of its 'quantitative easing programme' to boost the money supply by £50 billion to £175 billion.
Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically by increasing the credit in its own bank account.
It is used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to 'seed' the financial system with new money through what is know as quantitative easing.
Today's double initiatives come as official figures and surveys have each shown manufacturers and services firms are at last emerging from recession, while house prices have also risen.
Economists expect the UK to return to growth between July and September but problems in the banking sector could still restrain a recovery, and official estimates showed a disappointing 0.8% fall in output during the second quarter of this year.
However, in a statement explaining the surprise move, the Bank of England said the recession "appears to have been deeper than previously thought" but it said the "pace of decline has slowed" and business surveys suggested the low point in activity was "close at hand".
"Though there are signs that credit conditions may have started to ease, lending to business has fallen and spreads on bank loans remain elevated," it added.
The Bank said: "On the one hand, there is a considerable stimulus still working through from the easing in monetary and fiscal policy and the past depreciation of sterling.
"On the other hand, the need for banks to continue repairing their balance sheets is likely to restrict the availability of credit, and past falls in asset prices and high levels of debt may weigh on spending."
It added: "While some recovery in output growth is in prospect, the margin of spare capacity in the economy is likely to continue to grow for some while yet, bearing down on inflation in the medium term."
The news on QE came in an exchange of letters with Bank Governor Mervyn King with the Chancellor Alistair Darling. He agreed to them increasing the QE threshold to £175 billion as a result of this correspondence.
The MPC's caution underlines how a weak banking sector could yet weigh on recovery despite £6 billion in combined profits from HSBC and Barclays on Monday.
Lloyds Banking Group and nationalised Northern Rock have reported losses of £4 billion and £724 million respectively.
According to official estimates, the UK economy has now shrunk by 5.7% since the first quarter of 2008, over twice that of the early 1990s recession.
(BMcC/KMcA)
Related UK National News Stories
Click here for the latest headlines.
09 September 2010
UK Interest Rates Remain On Hold At 0.5%
The Bank of England Monetary Policy Committee (MPC) has kept interest rates on hold at 0.5% for the 18th month in a row. The decision had been expected, although there have been calls for a rise in order to curb inflation. The MPC also continued with the Bank's £200 billion quantitative easing programme. The UK economy grew by 1.
UK Interest Rates Remain On Hold At 0.5%
The Bank of England Monetary Policy Committee (MPC) has kept interest rates on hold at 0.5% for the 18th month in a row. The decision had been expected, although there have been calls for a rise in order to curb inflation. The MPC also continued with the Bank's £200 billion quantitative easing programme. The UK economy grew by 1.
05 May 2011
Bank Of England Maintains Bank Rate At 0.5%
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.
Bank Of England Maintains Bank Rate At 0.5%
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.
04 March 2010
Interest Rates Held Again
The Bank of England today held interest rates at 0.5%, as widely predicted. Monetary Policy Committee members also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The previous change in bank rate was a reduction of 0.5 points to 0.5% on 5 March 2009.
Interest Rates Held Again
The Bank of England today held interest rates at 0.5%, as widely predicted. Monetary Policy Committee members also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The previous change in bank rate was a reduction of 0.5 points to 0.5% on 5 March 2009.
11 November 2009
Pre-Budget Due Next Month
Public spending is predicted to dominate next month's pre-Budget report, which will be presented by the Chancellor on Wednesday 9 December. It will be Allister Darling's last pre-Budget report before next year's General Election, which must take place before June.
Pre-Budget Due Next Month
Public spending is predicted to dominate next month's pre-Budget report, which will be presented by the Chancellor on Wednesday 9 December. It will be Allister Darling's last pre-Budget report before next year's General Election, which must take place before June.
11 February 2010
More Support For Wounded Soldiers
Sick and injured UK soldiers will be given enhanced support to help them return to duty or civilian life, under new plans announced by the Ministry of Defence today. The Army Recovery Capability (ARC) will take soldiers from the point of injury or illness through to their return to duty or into a successful and supported civilian life.
More Support For Wounded Soldiers
Sick and injured UK soldiers will be given enhanced support to help them return to duty or civilian life, under new plans announced by the Ministry of Defence today. The Army Recovery Capability (ARC) will take soldiers from the point of injury or illness through to their return to duty or into a successful and supported civilian life.
-
Northern Ireland WeatherToday:After a dry start this morning rain will spread from the northwest across all parts. This afternoon will be dull with some patchy rain and drizzle. Becoming much milder through the afternoon. Maximum temperature 11 °C.Tonight:A cloudy evening and night with a little light rain or drizzle, perhaps some clear periods developing along the east coast. A very mild night everywhere. Minimum temperature 10 °C.
