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| Version 1 | Version 2 |
|---|---|
| Bank keeps interest rates at 0.5% | Bank keeps interest rates at 0.5% |
| (30 minutes later) | |
| The Bank of England has kept interest rates on hold at 0.5%, in a widely expected move following a number of rate cuts in recent months. | The Bank of England has kept interest rates on hold at 0.5%, in a widely expected move following a number of rate cuts in recent months. |
| Rates remain at an all-time low after six cuts since October last year, when interest rates stood at 5%. | Rates remain at an all-time low after six cuts since October last year, when interest rates stood at 5%. |
| The Bank is also continuing with quantitative easing, or creating money to help boost lending. It has so far injected £26.4bn into the system. | |
| The Bank and the government are trying to ease the economy out of recession. | The Bank and the government are trying to ease the economy out of recession. |
| New policies | New policies |
| As well as keeping rates on hold, the Bank's Monetary Policy Committee also voted to continue "with the programme, announced on 5 March, of asset purchases totalling £75bn financed by the issuance of central bank reserves". | As well as keeping rates on hold, the Bank's Monetary Policy Committee also voted to continue "with the programme, announced on 5 March, of asset purchases totalling £75bn financed by the issuance of central bank reserves". |
| The first tentative signs [of quantatative easing] have been encouraging John Cridland, CBI deputy director-general class="" href="/1/hi/business/7924506.stm"> What is quantitative easing? | |
| With rates already so low, the Bank has been being forced to look at other policies to boost the economy. | With rates already so low, the Bank has been being forced to look at other policies to boost the economy. |
| This is why it introduced quantitative easing - buying assets such as government and corporate bonds to increase the supply of money in the economy in the hope that banks will eventually find it easier to lend to companies and individuals. | This is why it introduced quantitative easing - buying assets such as government and corporate bonds to increase the supply of money in the economy in the hope that banks will eventually find it easier to lend to companies and individuals. |
| However UK businesses were concerned that quantitative easing had not been "sufficiently effective" so far in encouraging banks to lend. | |
| "Quantitative easing must be implemented in a more transparent way. The Bank of England must spell out what rate of expansion in the money supply they are planning to achieve," said David Kern, chief economist at the British Chambers of Commerce. | |
| Savers versus borrowers | Savers versus borrowers |
| John Cridland, CBI deputy director-general, said the Bank's Monetary Policy Committee (MPC) could no longer put interest rate setting at the heart of their discussions, as the "world has moved on". | John Cridland, CBI deputy director-general, said the Bank's Monetary Policy Committee (MPC) could no longer put interest rate setting at the heart of their discussions, as the "world has moved on". |
| He said they were now having to influence monetary conditions more directly, with quantitative easing as their main lever. | He said they were now having to influence monetary conditions more directly, with quantitative easing as their main lever. |
| "It is too early to judge quite how quickly this will begin to affect the broader economy," said Mr Cridland. | "It is too early to judge quite how quickly this will begin to affect the broader economy," said Mr Cridland. |
| Rates remain at their lowest level in the Bank's history | Rates remain at their lowest level in the Bank's history |
| "But the first tentative signs of the impact on gilt yields, corporate spreads and commercial paper issue have been encouraging." | "But the first tentative signs of the impact on gilt yields, corporate spreads and commercial paper issue have been encouraging." |
| While low rates are good news for some mortgage holders, they are not so welcome for savers, who have seen the returns paid on their deposits slashed. | While low rates are good news for some mortgage holders, they are not so welcome for savers, who have seen the returns paid on their deposits slashed. |
| "Whilst savers will be pleased that rates have not been cut any further, this will do nothing to help those who have seen the income they earn on their savings diminish sharply in recent months," said Adrian Coles, director-general of the Building Societies Association. | "Whilst savers will be pleased that rates have not been cut any further, this will do nothing to help those who have seen the income they earn on their savings diminish sharply in recent months," said Adrian Coles, director-general of the Building Societies Association. |
| "Similarly, today's decision shouldn't worsen mortgage availability." | "Similarly, today's decision shouldn't worsen mortgage availability." |
| He added: "Leaving Bank Rate on hold allows the impact on the wider economy of the recent rate cuts and the decision to start quantitative easing to be assessed. It will take some time before the effectiveness of these policies becomes more clear." | He added: "Leaving Bank Rate on hold allows the impact on the wider economy of the recent rate cuts and the decision to start quantitative easing to be assessed. It will take some time before the effectiveness of these policies becomes more clear." |
| Producer prices ease | Producer prices ease |
| The latest rates decision comes as the sharp fall in mortgage repayments, caused by the cuts in interest rates, led the Retail Prices Index (RPI) inflation measure, which includes housing costs, to fall to zero for the first time in 49 years in February. | The latest rates decision comes as the sharp fall in mortgage repayments, caused by the cuts in interest rates, led the Retail Prices Index (RPI) inflation measure, which includes housing costs, to fall to zero for the first time in 49 years in February. |
| However, the Consumer Prices Index (CPI) inflation measure rose to an annual rate of 3.2% in February, up from 3% the previous month and still above the target rate of 2%. | However, the Consumer Prices Index (CPI) inflation measure rose to an annual rate of 3.2% in February, up from 3% the previous month and still above the target rate of 2%. |
| On Thursday, official data showed that prices of good leaving UK factories were rising at their slowest pace for more than 18 months on the back of lower oil prices and weaker demand. | On Thursday, official data showed that prices of good leaving UK factories were rising at their slowest pace for more than 18 months on the back of lower oil prices and weaker demand. |
| Producer output prices were up just 0.1% between February and March and by 2% over the year. | Producer output prices were up just 0.1% between February and March and by 2% over the year. |
| It was the slowest annual rate of increase since July 2007, the Office for National Statistics (ONS) said. | It was the slowest annual rate of increase since July 2007, the Office for National Statistics (ONS) said. |
| Separate figures showed that the UK's goods trade gap with countries outside the European Union narrowed by more than expected to £3.964bn in February from £5.631bn the month before. | Separate figures showed that the UK's goods trade gap with countries outside the European Union narrowed by more than expected to £3.964bn in February from £5.631bn the month before. |
| Exports were up 12.8% and imports were down 5.4%, as those selling goods abroad benefited from the weaker pound. | Exports were up 12.8% and imports were down 5.4%, as those selling goods abroad benefited from the weaker pound. |