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BoE holds base rate at 0.5%

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  • 08/03/2012
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BoE holds base rate at 0.5%
The Bank of England's Monetary Policy Committee (MPC) has voted to keep base rate at 0.5%, marking three years of the record low figure.

Members also voted to keep the quantitative easing (QE) asset purchase programme at £325bn.

The Bank originally lowered the base rate to 0.5% in March 2009 in reaction to the global financial crisis.

Between February and May 2011, three of the MPC’s nine members voted to increase the rate, although the decision to maintain it at its current rate has been unanimous since August.

The QE programme was increased by £50bn in February, following a £75bn increase in October.

According to the National Association of Pension Funds, QE has knocked £90bn off the value of final-salary schemes as it has made government bonds, in which pension funds are big investors, more expensive to buy.

Ben Thompson, managing director of Legal & General Mortgage Club, said: “Many borrowers have been slightly confused in the last week having received notifications of increases to their standard variable rates, which more typically happens when base rate rises.

“Those changes were of course for different reasons and base rate is certainly not on the up.

“Market wobbles still exist in terms of the eurozone and although we have seen some positive news in the economy since Christmas, it is too early to claim sight of anything resembling green shoots yet. The Bank of England will carry on with stimulative policy for many more months to come until we are demonstrably clear that the UK is out of the woods.”

 

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