Bank of England Holds Rates at 0.5%

The Bank of England has held UK interest rates at a record low of 0.5% for another month.

The size of the Bank’s economic stimulus programme, known as quantitative easing, was also kept unchanged at £375bn.

Last month, Bank governor Mark Carney hinted that rates could increase later this year as the UK’s economic recovery becomes more secure.

When it comes, any rise in rates is expected to be small.

Speaking last month, Mr Carney said “we expect that eventual increases in Bank rate will be gradual and limited”. He has also talked of rates hitting a “new normal” of 2.5% by 2017.

“Even if the Bank of England does start edging interest rates up before the end of 2014, we still expect them to only reach 1.25% by the end of 2015, 2.0% by the end of 2016 and 3.0% by the end of 2017,” said Howard Archer, chief UK and European economist at IHS Global Insight.

He added that there was “considerable doubt” as to whether the Bank of England’s first interest rate rise would occur in late 2014 or early 2015.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza