Bank of England maintains interest rates at 0.5%

The Bank of England's Monetary Policy Committee today voted to maintain interest rates at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £125 billion financed by the issuance of central bank reserves.

The Committee expects that the announced programme will take another month to complete. The Committee will review the scale of the programme again at its August meeting, alongside its latest inflation projections.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A £75 billion programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The programme was increased to a total of £125 billion on 7 May 2009.

Ben Thompson, Director of Mortgages at Legal & General said: "As Mervyn King was explaining to Pete Sampras at Wimbledon recently, inflation figures came in higher than expected which may mean that the MPC needs to raise rates before the end of next year. Throughout 2010 the challenge for the MPC will shift towards combating inflation whilst not going so far as to choke off any economic recovery. Add into the mix the inevitable tax increases that will be required and the knock-on effect that will have on spending patterns and you start to get an idea of the enormity of the task. It will become a completely different challenge to the one they have been facing for the past year or so. Whilst many are predicting stability in the base rate for some time to come, recent experience has shown that a week is a long time in politics and even longer in the mortgage industry."