Bank holds base rate at 0.5%

The Bank of England has held interest rates at 0.5% for the 20th consecutive month.

It has also decided not to pump any more money into the economy through its quantitative easing programme.

Ben Thompson, director of mortgages at Legal & General says whilst the doommongers and naysayers will have been most upset to see the recent positive GDP numbers, it is still too early to sit back and relax as the economy recovers, and way too early to return monetary policy to anything like normal.

He says: “It remains our firm belief that Bank Base Rate will remain frozen through this winter, and in all likelihood unchanged throughout the whole of 2011.”

Barry Naisbitt, chief economist at Santander UK, says: “A familiar story – there was no change from the MPC on rates again today.  However, after last month’s three way split vote, financial markets will be looking to the minutes of the meeting and, more particularly, the Inflation Report to get a better sense of how the MPC is now thinking. 

“For the past few months one MPC member has been voting to raise rates and last month another member voted for more quantitative easing.  With inflation still well above its target and the increase in GDP in the third quarter ahead of market expectations, it will be interesting to see if the voting pattern changed.”