UK interest rates held 0.5 per cent

The Bank of England's Monetary Policy Committee today voted to maintain UK interest rates at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £200 billion financed by the issuance of central bank reserves.

The Committee expects the announced programme to take another month 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 programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The most recent change in the size of that programme was an increase of £25 billion to a total of £200 billion on 5 November 2009.

Ben Thompson, Director of Mortgages at Legal & General, commented: "It might be a New Year but monetary policy on interest rates stays the same. This could well be the case throughout the whole of 2010 as the first interest rate rise might not be until next year. However, a year is a long time in the housing industry and inflationary pressures could change the landscape quite dramatically. Rising oil prices, an increase in VAT, improvements in the economy and the as yet unknown full effects of the quantitative easing package will all be pushing prices upwards. We've never seen financial intervention and stimulus on this scale before and we don't know for sure how it will pan out for borrowers. The normal rules don't necessarily apply and there is a risk that the Bank of England has already pumped too much fuel into the engine."