The Bank of England’s Monetary Policy Committee (MPC) has today chosen to leave the United Kingdom’s interest rate unchanged at 0.5%.
The MPC has also elected to leave unaltered the scope of the quantitative easing asset purchase programme at £200bn.
The decision was widely expected, as the interest rate has not been altered since the nadir of the financial crisis and weak growth means it is unlikely to be increased in the near future.
Although inflation has been, and remains, far above the 2% target rate the Bank of England’s governor, Mervyn King, has stuck to his guns and supported the low interest rate, arguing that the inflation rate will naturally reduce and that its present high level is fuelled by external factors that will not be materially altered by cutting interest rates.
In the eurozone, the European Central Bank (ECB) has increased rates twice this year already, taking the single currency’s interest rate from the record low of 1% to 1.5%.