UK interest rates held 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 £175 billion financed by the issuance of central bank reserves.

The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.

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 and to a total of £175 billion on 6 August 2009.

Robert Sinclair, Director of the Association of Mortgage Intermediaries (AMI), commented: "The ‘steady as she goes' interest rate policy set by the Bank of England underlines the issues facing UK consumers. Banks are still constrained in their ability to lend to consumers and small businesses. While the quantitative easing programme is welcome, its results are not immediately visible and are not directly assisting public confidence. First time buyers and those on higher loan to value mortgages are still in very difficult positions and more needs to be done to assist those groups who will be crucial in ensuring we speed the economic recovery.

"A further cut in rates, indeed a move to negative rates as suggested by some commentators, might well force banks into lending more. This would assist in promoting the recovery that is showing early indications of arriving."