Category: Interest Rates (26)

The Bank of England on Wednesday abandoned its six-month-old strategy of pledging to consider raising interest rates only when unemployment falls to 7 percent, saying it would now consider a range of factors.

Mark J. Carney, the governor of the Bank of England, also stressed that a rate increase was still some way off. Click to view story on NY Times

The London Evening Standard reports that the announcement in America that interest rates are expected to be held at their current level until 2015 is reassuring for mortgage borrowers in the UK. If the US keeps rates low, the Bank of England will have to follow. Read more here.

From the FT: The International Monetary Fund has called on the Bank of England to cut interest rates and resume printing money to boost demand in the economy. It has also asked the UK government to prepare a Plan B for deficit reduction if these measures do not work.

In a tough assessment of the UK’s economic prospects, the fund said the economy had not responded as it had hoped and risks of continued stagnation were high.

It said “further monetary easing is required” and should happen with more quantitative easing and a cut in the 0.5 per cent interest rate.

Click image to go to FT story

Click image to go to FT story

The Bank of England has agreed to extend its quantitative easing (QE) programme by £50bn to give a further boost to the UK economy.

The Bank’s Monetary Policy Committee (MPC) also said it would keep interest rates at their record low of 0.5%.

UK interest rates have been held at that level since March 2009.

Interest rates will stay on hold at their record low until 2016 according to the Centre for Economics and Business Research. Growth under or around 1% for years to come will force the Bank of England to keep the base rate at 0.5%, cut to that level in March 2009, for another four years, the CEBR predicts.

£75bn more quantitative easing announced by Sir Mervyn King to boost demand in economy. The Bank’s governor said the UK was suffering from a 1930s-style shortage of money and needed a second dose of quantitative easing to boost demand and prevent inflation falling too low.

THE FTSE 100 continued to make progress yesterday, as fresh economic stimulus measures from the Bank of England sent the benchmark index higher.

(Reuters) – The Bank of England will not raise interest rates from record lows of 0.5 percent until next October at the earliest but there is still only a one-in-three chance it will restart its asset purchase programme, a Reuters poll found on Wednesday 31st August.

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The Bank of England has signalled that interest rates will remain on hold for much longer than previously believed, as it forecast lower economic growth and inflation over the next two years.

In outlining the Bank’s new forecasts, governor Sir Mervyn King emphasised that they did not take account of worst-case scenarios from the eurozone debt crisis.

Sir Mervyn declined to commit to holding interest rates, currently set at 0.5 per cent, for a set period. On Tuesday, the US Federal Reserve indicated that short-term rates would remain at their current level for two years.

“The current market expectation of where Bank rate would be in 2012 is very close to where it is now,” he said. “So expectations have already got to that point without [our] having to make a specific commitment.”

Mervyn King. Click for full story from FT.com

Mervyn King. Click for full story from FT.com

SOURCE: FT.com

UK interest rates have been kept at a record low of 0.5% by the Bank of England’s Monetary Policy Committee (MPC).

Economists had expected interest rates would remain unchanged due to the subdued economy. GDP figures for the second quarter showed growth of 0.2%.

A majority of economists polled by the BBC expect interest rates to remain unchanged until next year.

Interest rates will not rise until 2014 “at the earliest,” experts have suggested, after the Bank of England said it is unlikely to change its monetary policy stance soon.

The July minutes of the Bank’s Monetary Policy Committee (MPC) showed members voted seven to two to hold rates at 0.5%, with it saying that recent economic data makes it unlikely it will raise rates in the near term.

The news came a day after Woolwich launched its cheapest mortgage deals for 15 years, reducing rates on a third of its fixed and tracker mortgages.