Thursday, May 07, 2009

UK Interest rates remain on hold at 0.5%

BBC: UK interest rates on hold at 0.5%

The Bank of England has kept interest rates on hold at 0.5%, in a move that had been widely expected following a number of rate cuts in recent months. Interest rates remain at an all-time low after six cuts since October last year, when they stood at 5%. With little room for rate cuts the Bank has been pumping money into the banking system through quantitative easing.

Posted by jack c @ 12:02 PM (919 views) Add Comment

5 Comments

1. inbreda said...

if they've officially run out of places to go do we really need them anymore?

Thursday, May 7, 2009 12:07PM Report Comment
 

2. little professor said...

The hold was a foregone conclusion. The main news is the "BoE Increases Size of Asset Purchase Programme by £50 Billion to £125 Billion." Money printing galore...

The Committee agreed to continue with its programme of purchases of government and corporate debt financed by the issuance of central bank reserves and to increase its size by £50 billion to a total of £125 billion. The Committee expected that it would take another three months to complete that programme, and it will keep the scale of the programme under review.

CPI inflation was 2.9% in March, significantly higher than the 2% inflation target. Past falls in sterling have continued to put upwards pressure on inflation. But the degree of spare capacity in the economy has increased and the loosening in the labour market has contributed to a sharp easing in pay pressures. CPI inflation is likely to drop below the 2% target later this year, driven in part by diminishing contributions from food and energy prices. The substantial margin of spare capacity in the economy should continue to bear down on inflation thereafter.

Thursday, May 7, 2009 12:07PM Report Comment
 

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4. paul said...

I love the BoE's vague comments on inflation going below 2% sometime in the future, but they are starting to sound distinctly hollow.

Thursday, May 7, 2009 12:23PM Report Comment
 

5. refusetobuy said...

They are running out of inflation excuses for printing money. That's why they can't do the full 75bn.
Makes a <30 year gilt auction likely to fail
Means government will have to raise interest rates.
Other loans follow
Many more defaults
Deeper depression

Thursday, May 7, 2009 12:28PM Report Comment
 

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