BOE rate at record low

LONDON The Bank of England kept its key interest rate at a record low 0.50 per cent yesterday and also opted against altering its stimulus plans despite the fragile state of the economy. “The Bank of England's Monetary Policy Committee (MPC) today voted to maintain the official bank rate paid on commercial bank reserves at 0.5 per cent,” the BOE said in a statement. “The committee expects the announced programme of asset purchases to take until early February to complete. The scale of the programme will be kept under review.” Minutes from the two-day MPC meeting will be published on January 25,

when traders will gain a clearer insight into policymakers' thoughts. The Boe's main interest rate has stood at 0.50 per cent since March 2009 when the bank also began injecting £200 billion into the economy under a radical quantitative easing (QE) policy. The British central bank decided last October to increase the QE amount by £75 billion, as Britain's economy struggled to recover from recession. QE is a process whereby central banks create new cash that is used to purchase assets such as government and corporate bonds in the hope of giving a boost to lending and economic growth. It amounts to monetising debt. At the same time, some economists believe that quantitative easing — also

widely considered to be simply printing money — stokes inflation. Britain's 12-month inflation dipped to 4.8 per cent in November from 5.0 per cent in October, helped by lower food and petrol prices, and is forecast to fall back much closer to the Boe's 2.0-per cent target during 2012. On Wednesday, figures showed that the German motor driving euro zone growth went into reverse in the last quarter of last year, likely contracting slightly, despite growing by 3.0 per cent over the whole of 2011. — AFP