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Bank suspends £200bn stimulus package

The Bank of England has decided against further quantitative easing (QE) to stimulate growth in
the UK economy and froze interest rates at 0.5 per cent.

Under QE the bank has pumped £200bn of new money into the economy – by buying assets such as government bonds to boost lending by banks.

The bank's monetary policy committee held the interest rate for the 11th consecutive month.

The Bank said in a statement that it would "continue to monitor the appropriate scale of the asset purchase programme" and further purchases would be made if needed.

Governor Mervyn King warned last month inflation was "likely to rise to over 3 per cent for a while", and could go even higher if energy prices and indirect taxes were to increase further, but added that it "should return to target in the medium term".

The UK officially came out of recession in the fourth quarter of 2009 – but at 0.1 per cent the growth was much lower than expected.