Bank of England keeps rates and monetary policy on hold

The Bank of England's Monetary Policy Committee has kept interest rates at 0.5 per cent and the stock of assets bought under its quantitative easing programme at £375bn, it said on Monday.

The economic recovery of 2014 raised expectations that the central bank would soon tighten monetary policy. However, growth has slowed in the first quarter of this year, halving to 0.3 per cent.

Meanwhile, inflation has tumbled to zero, after the sharp fall in energy prices in the last six months of 2014. Oil prices have since recovered, with Brent, the international benchmark, rising towards $70 a barrel last week from a low of $45 in January.

Economists, however, still believe it will take time for inflation to recover towards the BoE's target of 2 per cent.

The nine-strong MPC probably took Monday's decision unanimously. Last August two members of the rate-setting body, Martin Weale and Ian McCafferty, dissented and voted for a rise but they have since reverted to consensus.

The MPC held its monthly meeting last Thursday, but only announced its decision on Monday to avoid overlapping with Britain's general election.

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