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Bank of England keeps interest rate unchanged at 0.5 pct

English.news.cn   2014-04-10 19:54:43

LONDON, April 10 (Xinhua) -- The Bank of England (BoE), the central bank of Britain, on Thursday voted to keep its main interest rate unchanged at 0.5 percent, and also keep its quantitative easing (QE) program at 375 billion pounds (629 billion U.S. dollars).

The decision is within the market's estimation.

The BoE cut the interest rate to a record low of 0.5 percent in March 2009, in order to deal with impact brought by the financial turmoil and euro zone sovereign debt crisis.

Earlier this year, the BoE revised its forward guidance policy framework, by scrapping its seven percent unemployment target, and introducing nearly 20 economic indicators to determine its monetary policy movement, as the unemployment rate has been dropped to 7.2 percent, approaching the "trigger point".

Economists predicted that the central bank would not raise the benchmark interest rate, as well as taper the QE program, until next year.

In an interview with the Northern Echo newspaper last week, Mark Carney, the BoE's governor, said interest rate might begin to rise before the general election in May 2015.

The BoE will probably lift its key rate by 25 basis points by April 2015, according to one-month forward contracts for the sterling overnight interbank average figure.

"With the UK set for a favorable period of strong growth and low inflation, we still think that BoE will be able to leave rates on hold until late 2015," said Samuel Tombs, an economist at Capital Economics, in a note.

British inflation rate fell from 1.9 percent in January to 1.7 percent in February, below the 1.8 percent BoE predicted.

Earlier this week, British National Institute of Economic and Social Research estimated that economic growth will accelerate to 0.9 percent in the first quarter of 2014, which will be higher than the 0.7 percent a quarter ago and be the fastest in four years. (1 British pound =1.67 U.S. dollars)

Editor: Fu Peng
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