Bank of England keeps rates on hold

The Bank of England’s Monetary Policy Committee has voted to keep interest rates on hold at 0.5% and to maintain the size of the asset purchase programme.

The MPC were split 7-2 over whether to increase the size of its quantitative easing programme last month.

The minutes from March’s meeting show that of the nine members which make up the committee, David Miles and Adam Posen voted to increase the size of the programme by £25bn to £350bn.

The committee last increased the size of its asset purchase programme by £50bn in its February meeting, taking it to a total of £325bn.

Ben Thompson, managing director of Legal & General Mortgage Club, says: “No change expected this month, no change announced.

“US markets were spooked a little yesterday at the thought of there perhaps being no more proactive stimulus provided for the foreseeable future.

“The MPC in the UK will next month have to decide whether or not it wishes to press on with further Quantitative Easing. Markets have almost become hooked on this stimulus and the burning question now is can they cope with going cold turkey?

“There has been a lot of good news over recent months however the economy is far from out of the woods and additionally there are overseas problems, not to mention an increasing oil price that could yet combine to slow things down again.

“Stimulus won’t be withdrawn or deferred unless there are strong and clear signs of a sustained and robust UK recovery. That decision wil come into sharper focus next month.”