Interest rates kept on hold at 0.5%

The Bank of England’s Monetary Policy Committee has once again voted to keep the base rate on hold at 0.5%.

It has also opted to maintain the size of the Asset Purchase Programme at £200bn.

Interest rates have been on hold at 0.5% since March 2009.

Six members of the MPC voted to keep the base rate at its historic low of 0.5% in May, while Andrew Sentance opted to increase it by 0.5% and Spencer Dale and Martin Weale voted for a 0.25% hike, as they did in April.

Regarding the stock of asset purchases, eight members of the MPC voted in favour of keeping it on hold in May, while Adam Posen voted to increase it by £50bn as he did the previous month.

Ben Thompson, managing director of Legal & General Mortgage Club, says: “The gap between bank rate and inflation may be widening but there are precious few other indicators that provide a rationale for increasing BBR from its current rock bottom levels.

“The Bank remains in the thick of it; on the one hand needing to ensure that a sustainable economic recovery is baked in, on the other hand ensuring it does not lose its credibility as an independent rate setter that is capable of maintaining a controlled and low inflation economy. It’s a tough one that, but the recovery has to come first.”