RTRS: Bank of England holds rates, presses on with QE
The Bank of England left interest rates at a record low of 0.5 percent on Thursday and said it would take two more months to complete its 75 billion pound ($110 billion) quantitative easing programme to fight recession.
This was the first month that the central bank's Monetary Policy Committee had left interest rates on hold since last September, having since then cut them by a total of 4.5 percentage points to tackle Britain's first recession since the early 1990s.
It signalled last month that borrowing costs would not go any lower but it would now resort to pumping money directly into the economy -- so-called quantitative easing -- to boost demand, something also being done in the United States and Japan.
The BoE said it had voted to continue with the initial 75 billion pound programme to buy government and corporate debt, and would review the decision each month.
"The Committee noted that since its previous meeting a total of just over 26 billion pounds of asset purchases had been made and that it would take a further two months to complete that programme," it said in a statement.
There was little market reaction to the decision and the brief statement which lacked much of the drama of recent BoE announcements. However, some economists said the Bank could have provided more details on its quantitative easing programme.
"(It is) no surprise they did not move the rate; I think it is bit of a missed opportunity. They could have given us some verbal intervention," said Alan Clarke, UK economist with BNP Paribas.
"I think it's a bit disappointing that gilt yields have given up a lot of the fall that they had in the immediate aftermath of QE.
"So they could have injected some sort of wording, determination, to keep yields down or they could have even stepped up the pace of purchase."
BUDGET LOOMS
With benchmark interest rates near zero, the U.S. Federal Reserve, Swiss National Bank and Bank of Japan have also recently flooded their markets with cash, creating money to buy domestic debt as they try to stimulate lending.
