Bank of England Keeps Bank Rate at 0.5%, Asset Purchase Programme Size at £375 Billion
The Bank of England’s Monetary Policy Committee has voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.
The Committee also voted to continue with its programme of asset purchases totalling £375 billion, financed by the issuance of central bank reserves.
Tom Hooper, economist at KPMG, said: “It comes as no surprise that the Monetary Policy Committee has decided to sit on its hands. After all, it was only last month that they decided to embark on another round of QE – and it will take some time for the effects of that injection to feed through. For now – the Committee has sensibly opted to wait and see.
“But the overall picture remains bleak. Output has gone nowhere for the past two years and remains over 4% below its previous peak. And the economy is currently shrinking, rather than recovering.”
“Looking ahead, more imaginative monetary policies – and perhaps even a fiscal stimulus – may be required to counteract the contractionary forces which are now gripping the economy.”
The Committee expects the announced programme of asset purchases to take another three months to complete. The scale of the programme will be kept under review.
The Committee’s latest inflation and output projections will appear in the Inflation Report to be published at 10.30am on Wednesday 8 August.
The minutes of the meeting will be published at 9.30am on Wednesday 15 August.
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.
The Bank of England said it will continue to offer to purchase high-quality private sector assets on behalf of the Treasury, financed by the issue of Treasury bills, in line with the arrangements announced on 29 January 2009 and 29 November 2011.