Interest rates held at record low after one year at 0.5%

The Bank of England's monetary policy committee left interest rates on hold at their record low of 0.5% today, as news of a fresh decline in house prices underlined the fragility of economic recovery.

Halifax said house prices fell by 1.5% in February, adding to fears that the rally in the property market has run out of steam, after the MPC decided to wait for more evidence that the economy is improving before reversing its recession-busting policies.

Interest rates were slashed to 0.5% last March, at the same time as the Bank announced that it would implement the radical policy of quantitative easing. By the end of last year, it had injected £200bn into the economy.

Today's decision, to leave rates at 0.5% and extend the "pause" in QE, was widely expected by financial markets.

"With considerable uncertainty still surrounding the economic outlook, the BoE is likely to remain in 'wait and see' mode for some time yet, in order to gauge the strength of the recovery and the risks to inflation over the medium term," said Colin Ellis, of Daiwa Capital Markets.

Posted at 08:14PM Mar 04, 2010 by Kelly Board in The Economy  |  Comments[0]