Bank of England freezes interest rate

GMT 18:22 2015 Thursday ,08 October

Arab Today, arab today Bank of England freezes interest rate

The Bank of England
London - AFP

The Bank of England said Thursday it voted to keep its main interest rate at 0.5 percent against a backdrop of zero inflation in Britain.

The central bank's Monetary Policy Committee (MPC) maintained its key interest rate at the record-low it has been for 6.5 years, according to minutes of its latest monthly meeting, which was held on Tuesday.

The BoE also left unchanged the level of cash stimulus pumping around the British economy at £375 billion ($575 billion, 509 billion euros).

Policymakers "voted by a majority of 8-1 to maintain bank rate at 0.5 percent", the Bank of England said in the minutes.

The nine-member MPC was meanwhile unanimous in its decision to keep the stimulus, known as quantitative easing, at the same level.

"Twelve-month CPI inflation was zero in August, well below the (Bank's) two percent target rate," the minutes noted.

In a busy day for major central banks, both the US Federal Reserve and the European Central Bank are to release minutes from their last monetary policy meetings.

While both the Fed and BoE are still on course to raise interest rates amid expectations of higher inflation in the United States and Britain, a slowdown in China has put pressure on central bankers to delay any hikes to borrowing costs until 2016 at the earliest.

The BoE on Thursday noted that a slowdown across emerging economies, including China, risked intensifying.  

It also said that eurozone growth, Britain's main trading partner, remained "relatively resilient".  

The minutes added: "As always, the Committee will continue to monitor international developments, as well as evidence concerning the resilience of the domestic economy, to assess the outlook for inflation and activity in the United Kingdom, and set monetary policy... in the light of all of those factors."

Vicky Redwood, chief UK economist at research group Capital Economics, noted that "the MPC's decision to leave interest rates on hold again would have been an easy one given the recent softening in both domestic and global economic news".

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