Bank of England holds rates for 50th month in a row

(Source: Reuters)

The Bank of England's Monetary Policy Committee has voted to hold interest rates at their historic low of 0.5 per cent for a 50th month. Inflation has now been above the bank's two per cent target for 40 months.

Asset purchases were unchanged at £375bn. Previous minutes have shown that voting has been split by six to three against further easing.

Lee Hopley, chief economist at EEF:

Another month of no change but the decision was again unlikely to be unanimous. Some signs of growth at the start of the year, together with some stabilisation of activity indicators in April will have been regarded as positive. But confidence that the underlying growth situation is improving will be fragile, leaving the possibility of more asset purchases on the table.

James Knightley, ING:

We still feel that the recovery will be slow and the UK remains vulnerable to external shocks, particularly from the Eurozone, so there is the potential for further stimulus. Indeed, we are still pencilling in an extra £50bn of QE this year, but it is unlikely to happen before Mark Carney takes over on 1 July. Even then, August would be the most likely timing when the BoE comes up with another round of forecasts and done in combination with possible changes in forward guidance involving more explicit direction on how long loose monetary policy will last.

David Kern, chief economist at the British Chambers of Commerce:

Following the return to positive GDP growth in Q1, pressures for an increase in QE have eased. We still firmly believe that adding to QE would only provide marginal benefits for the economy, while increasing the risks of higher inflation and bubbles in the future.

Dr Howard Archer, chief European & UK economist at IHS Global Insight:

Despite the recent improved news on the UK economy, we believe it is still more a question of when the Bank of England will pull the Quantitative Easing trigger again, rather than will they? The economy is still far from buoyant and with fiscal policy tight and global growth muted and stuttering, there remains a strong case for further support from monetary policy. Meanwhile, upside inflation risks seem to be easing.