Bank of England leaves rates on hold

Published Jan 10, 2013

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The Bank of England kept its powder dry on Thursday, voting as expected not to buy more government bonds despite the economy teetering on the verge of another contraction.

After a two-day meeting, the BoE's nine-member Monetary Policy Committee said its main interest rate would stay at 0.5 percent and that it would not extend its gilt purchases beyond the 375 billion pounds' worth ($600 billion) bought so far.

None of the 64 economists polled by Reuters had expected a change in interest rates or in the BoE's total target for quantitative easing.

Worries about Britain's stubborn inflation are likely to have dissuaded policymakers from taking further action this month, while they await clearer signals on the health of the economy and further indications on the progress of a central bank scheme aimed at boosting lending.

Economists are roughly split on whether the BoE will restart its asset purchases in future, although no restart is expected before February at the earliest, when the BoE publishes its next quarterly economic update.

The BoE will release the minutes of its meeting on January 23. - Reuters

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