Bank Base Rate

UK interest rates have been held at 0.5% once again by the Bank of England.

All nine members of the Bank’s Monetary Policy Committee (MPC) have voted to keep rates at their record low, where they have now been for seven years.

The decision to freeze rates comes amid worries about global growth and uncertainty ahead of the EU referendum.

The Bank said uncertainty in the run-up to the referendum on EU membership – to be held on 23rd June – had hit sterling, and that UK economic growth could slow.

“There appears to be increased uncertainty surrounding the forthcoming referendum,” policymakers said and

“That uncertainty is likely to have been a significant driver of the decline in sterling”, “It may also delay some spending decisions and depress growth of aggregate demand in the near term.”

Bank base rateBank of England votes 8-1 to hold rates at 0.5%

UK interest rates have been left unchanged again at 0.5% by the Bank of England’s rate-setters.

The nine rate-setters on the Monetary Policy Committee (MPC) voted 8-1 for no change, predicting that inflation would stay below 1% until the second half of next year.

Ian McCafferty, one of four external members of the MPC, was the only one to vote for a rate rise.

He also voted for a quarter-point rise at each of the previous four meetings.

It is the 81st meeting in a row at which rates have been left unchanged at 0.5%.

The minutes of the meeting showed policymakers concentrated on the continuing subdued inflation environment.

Inflation as measured by the Consumer Prices Index (CPI) stood at -0.1% in October and the rate-setters predicted it would be slightly positive in November.

The MPC’s job is to keep CPI close to the government’s target of 2.0%.

Last week, the European Central Bank took steps to boost the eurozone economy, cutting its overnight deposit rate and extending its €60bn stimulus programme by six months.

But the Federal Reserve in the US is widely expected to raise rates at its policy meeting next week.

Bank of EnglandThe Bank of England has held UK interest rates at a record low of 0.5% for another month.

The quantitative easing programme is unchanged at £375bn.

Rates have been at 0.5% for five years, but as the economy recovers there are expectations of a rise early next year.

Last month, minutes of the Bank’s interest rate meeting in early August showed that two policymakers voted for a rise.

This was the first time in three years that rate-setters on the Bank’s nine-member Monetary Policy Committee (MPC) had done so.

Minutes of the latest MPC meeting are due to be published next week.

Bank governor Mark Carney has made clear that any rate rises would be small and gradual.

BOEThe Bank of England has held UK interest rates at a record low of 0.5% for another month

The size of the Bank’s economic stimulus programme, known as quantitative easing, was also kept unchanged at £375bn.

Last month, Bank governor Mark Carney hinted that rates could increase later this year as the UK’s economic recovery becomes more secure.

When it comes, any rise in rates is expected to be small.

Speaking last month, Mr Carney said “we expect that eventual increases in Bank rate will be gradual and limited”. He has also talked of rates hitting a “new normal” of 2.5% by 2017.

The number of people out of work is also falling, with the unemployment rate down to 6.6% in the three months to May.

On the other hand, there is little pressure to raise rates to keep prices in check – the inflation rate fell to 1.5% in May, down from 1.8% in the previous month. The Bank’s inflation rate target is 2%.

Interest rates have been at their record low of 0.5% since March 2009.

BOEThe Bank of England’s Monetary Policy Committee has once again voted to keep base rate at 0.5 per cent, the 61st month of record-low rates. The MPC also voted to keep its programme of quantitative easing at £375bn.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The previous change in the size of that programme was an increase of £50 billion to a total of £375 billion on 5 July 2012.

Bank of EnglandToday UK interest rates have been held at 0.5% for another month, the Bank of England has said.

The decision by the Bank’s Monetary Policy Committee comes five years after the record low level was first introduced.

It is the first rate decision since the bank amended its “forward guidance” policy that linked borrowing rates to unemployment figures.

Rates are unlikely to rise before the spring of 2015, analysts believe.

The Bank also kept its £375bn quantitative easing (QE) programme unchanged.

The half-decade of ultra-low interest rates has seen returns on savings hammered, while mortgage borrowers have reaped the benefits of lower repayments.

House prices rising at fastest rate for four years

House prices rose by 0.6% in February, a 9.4% increase on the same month in 2013, according to the Nationwide Building Society.

The annual rate of growth is the fastest for almost four years.

It puts the average price of a UK home at £177,846, which is still almost 5% below the 2007 peak.

The Nationwide said sales and prices were being driven by record low interest rates, higher employment and the easier availability of mortgages.

The lender’s chief economist, Robert Gardner, acknowledged that prices could accelerate even faster in the coming months, as more people took the plunge to buy for the first time or move. But he denied a house price “bubble” was being created.

“If you look at prices relative to earnings then housing does look relatively expensive by historic standards,” Mr Gardner told BBC News.

“But if you look at how much it costs to service a typical mortgage, that suggests that housing isn’t overly expensive at this point… because interest rates are at such low levels.”

The Nationwide pointed out that prices were also being driven higher by a continued lack of new homes.

“Price growth is being supported by the fact that the supply of housing remains constrained, with housing completions still well below their pre-crisis levels,” said Mr Gardner.

He added that just 109,500 new homes were built in England in 2013, which was 38% below the level recorded in 2007, and about half the projected number of new households expected to form each year.

BOEThe Bank of England’s Monetary Policy Committee has once again voted to keep base rate at 0.5 per cent and its programme of quantitative easing at £375bn.

The decision was widely expected as Bank of England Governor Mark Carney has said base rate will not rise until unemployment falls below 7 per cent or there is an unexpected spike in inflation. But even then a rate rise is not guaranteed.

Using the 7 per cent threshold, it was thought rates would not rise until at least 2016.

However, recent falls in unemployment have suggested that the threshold could be breached before that date, prompting economists to predict Bank of England lowering the threshold to 6.5 per cent, possibly in next month’s inflation report. This would allow the Bank of England to hold interest rates at 0.5 per cent this year.

According to the Office for National Statistics, the UK unemployment rate fell by a record 0.3 per cent to 7.4 per cent for the three months to October, representing the largest fall since jobless measurements began in 1971.

Unemployment reached its peak in early 2012 when the rate hit 8.4 per cent.

Base rate has remained at its current level since March 2009, when the MPC first voted to cut rates to record-lows in a bid to help stimulate the economy. On the same day the MPC launched its programme of quantitative easing, which was last increased in July 2012 by £50bn to £375bn.

No increase in base rate. The Bank of England’s Monetary Policy Committee has voted to keep base rate on hold at 0.50%, for the 40th consecutive month. The Bank has also said that an additional £50 billion is to be injected into the economy, bringing the total size of its asset purchase, or quantitative easing (QE), programme to £375 billion.

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 increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50 billion to a total of £325 billion.

In a November’s Mortgage magazine over half of mortgage advisers polled said they expected the base rate to stay at 0.5% until 2014 or longer as the global economic outlook darkens, while 34% said they expect an increase in 2013.

Last month the Centre for Economics and Business Research (CEBR) predicted interest rates to stay at 0.5% until 2016. Its other forecasts included inflation falling to 1.7% by Q4 and to remain around 2% thereafter, and for quantitative easing to increase to a total of £400bn over 2012.

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