UK interest rates held at 0.5%

The Bank of England's Monetary Policy Committee has voted to maintain interest rates at 0.5%.

The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

Barry Naisbitt, Chief Economist at Santander UK, commented: "As expected, there was no change from the Monetary Policy Committee (MPC) on rates today. The Bank Rate has now been held at a record low of 0.50% for more than a year and last month's Inflation Report dampened the prospects of an early change.

"The MPC has been using its quantitative easing policy together with the historically low level of rates and is watching the new economic data very carefully to see whether it is meeting its expectation of the likely development of inflation and output.

"Recent indicators, such as survey indicators of output, show a reasonably positive picture of economic activity, and GDP growth in the first quarter has been revised up from 0.2% initially to a slightly healthier 0.3%.

"Of course, inflation at 3.7% is well above its target, but this is largely due to temporary factors and the Bank of England expects it to move back towards the 2% target as the year progresses.  So this will have been one important factor in today's decision."