UK Interest Rates Remain at Record Low for Sixth Year

UK interest rates have been on hold at an all-time low of 0.5% for six years after Bank of England policymakers voted for no change at their March meeting.

It was at their March 2009 meeting that the Bank’s monetary policy committee decided emergency measures were required to address extreme circumstances.

At that point, they lowered rates from 1% to 0.5% and in another unprecedented move for the then 315-year old institution, pushed the button on quantitative easing.

US investment bank Lehman Brothers had collapsed six months earlier with disastrous consequences. Money markets had frozen, and no one fully understood the scale of the crisis that was hurtling head-on towards the global economy.

By March 2009 the UK was in recession.

Under the then governor Sir Mervyn King, the Bank initially pumped £75bn of new money into the financial system by buying government bonds in an attempt to limit the worst effects of the crisis.

QE was ultimately expanded to become a £375bn programme, which was also left unchanged by the MPC at its Thursday meeting.

Philip Shaw, economist at Investec, said: “On the sixth anniversary of the introduction of QE and near-zero interest rates, the MPC left policy unchanged at this month’s meeting.

via The Guardian

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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