Bank of England holds rates

THE Bank of England left the cost of borrowing at 0.5% today and held the value of its quantitative programme at £375bn.

The move was widely expected following last month’s statement by the new governor Mark Carney declaring there will be no rise in interest rates for around three years.

Mr Carney said the Bank will not consider raising interest rates until the unemployment rate has fallen to 7% or below.

He said he expected this would require the creation of about 750,000 jobs and could take three years. The UK unemployment rate currently stands at 7.8%.

Graeme Leach, chief economist at the Institute of Directors, said: “After introducing forward guidance last month, the probability of a change in policy this month was precisely zero.

“The economy continues to strengthen, but the IoD’s view is that any period of above trend growth is likely to be relatively short. Consequently, even with faster growth, the probability of a monetary tightening over the coming year remains low. However, the odds of a tightening would increase if broad money growth rose above 5% for a sustained period.”