Interest Rates held at 0.5%

08th May 2009

The Bank of England has held interest rates at 0.5% for the third time in succession. Since October last year the Bank has cut the rate six times, bringing it down from 5% to the current record low. With the historic low rate giving the Bank little room to manoeuvre it has tried to stimulate the economy through quantative easing - buying assets such as government and corporate bonds to increase the supply of money in the economy. Over £26bn has already been injected into the economy through this measure and the Bank has announced that it is on track to spend another £75bn on the process. However, The British Chambers of Commerce (BCC) has called on the Bank to speed up its use of the quantitative easing programme. "The recession remains severe and business is concerned that the quantitative strategy has not been effective so far. They must accelerate the asset purchase programme, and start implementing the second £75bn instalment " said David Kern, chief economist at the BCC.

Source: Newbusiness.co.uk  www.newbusiness.co.uk/news/interest-rate-held-05