This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7991156.stm

The article has changed 7 times. There is an RSS feed of changes available.

Version 3 Version 4
Bank keeps interest rates at 0.5% Bank keeps interest rates at 0.5%
(20 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 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 policiesNew 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 What is quantitative easing? What now for savers and borrowers? The first tentative signs [of quantatative easing] have been encouraging John Cridland, CBI deputy director-general What is quantitative easing? What now for savers and borrowers?
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.
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: "It is too early to judge quite how quickly this will begin to affect the broader economy.
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.
"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."
Savers versus borrowersSavers versus borrowers
That may soon begin to flow through to businesses and homeowners, according to Michael Coogan from the Council for Mortgage Lenders.
"There are a number of institutions who are going to make significant commitments to lend money to both to businesses and for home ownership," he told BBC News.
"But what we have also got is a market where there is a large number of lenders who are not as active, such as building societies and specialist lenders."
Rates remain at their lowest level in the Bank's historyRates remain at their lowest level in the Bank's history
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. class="bodl" href="/1/hi/business/7990268.stm"> What now for savers and borrowers?
"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."
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 easeProducer 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 interest rate decision came shortly after economic data showed exporters were benefiting from a weaker pound.
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%. 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.
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. Exports were up 12.8% and imports were down 5.4%, as the weak pound made UK goods cheaper abroad. class="bodl" href="/1/hi/business/7991735.stm"> UK factory price rises slow down
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.
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.