Interest rates stay at 0.5%

Lucy Tobin
5 Jun 2009

The Bank of England today left interest rates at their record low of 0.5%, and said it would maintain its £125 billion quantitative easing programme to inject cash into the economy.

Amid increasing indications of growing confidence in the economy, the Monetary Policy Committee's decision not to change the interest rate was widely expected by the City.

Ray Boulger, of mortgage broker John Charcol, said the spotlight was now on next month's meeting, when the MPC must decide whether to use the final £25 billion authorised by the Government to kick start the economy.

“Despite the Bank of England having used about £75 billion of the funds it has agreed to commit under its quantitative easing programme, it is hard to see any visible impact of this so far in terms of mortgage availability,” said Boulger.

“It may be that with the housing market performing better than virtually all the forecasts at the end of last year, albeit with activity still at an historically low level, the modest extra mortgage demand this has generated is enough to be the straw that breaks the camel's back.”