UK interest rates remain at 0.5%

April 8, 2010

The Bank of England has decided to keep the interest rates for the United Kingdom at 0.5%. A meeting of the Monetary Policy Committee (MPC), of the Bank of England, was responsible for causing the figure to remain at what are the lowest interest rates for the country on record. They have remained at 0.5% since March 2009. The course of quantitative easing, a form of monetary policy used to stimulate an economy when the interbank interest rate is either at or close to zero, will also be remaining at approximately £200 billion (US$304 billion, €228 billion) in the UK.

Mervyn King, the current Governor of the Bank of England, is also currently the leader of the MPC. He noted that it will take a great amount of time for the economy of the UK to recover. The British Chambers of Commerce, a trade organisation representing British business abroad, have also stated that reconstruction is still currently "fragile".

David Kern, the chief economist of the BCC, commented: "We expected and support the [MPC's] decision to continue with a holding approach. But, it should consider new techniques aimed at improving the effectiveness of the quantitative easing programme." He also commented that "[g]iven the dangers still facing the economy, it is important that the MPC perseveres with an expansionary strategy. Threats of a double-dip recession remain more serious in the near future than risks of higher inflation."

The United Kingdom emerged from the financial crisis of 2008-09 in the fourth quarter of 2009. According to the BBC, recent official statistics revealed the country's economy grew by 0.4% in the final three months of last year.