BoE holds interest rates at 0.5pc

Sam Cordon

June 6, 2013

In his final Bank of England Monetary Policy Committee outgoing governor Sir Mervyn King was also unable to convince the bank to restart its bond buying programme.

Since February King has argued for an additional £25bn of bond purchases to boost the listless economy but in recent meetings the Committee voted nine to three against such a move.

Stephen Smith, head of housing and external affairs at the Legal & General Network, said: “Recently we have seen signs of a tentative recovery as the UK economic picture starts to improve and other market indicators move into positive territory.

“However the market is still in need of stimulus and it is too early to start thinking about unwinding these measures at this stage.

“It is therefore unsurprising and welcome news that the MPC has elected to make no change this month.

“These historically low rates are currently offering opportunities to borrowers in a position to secure better deals but they will move sooner or later so borrowers should seek to take advantage while they can.”

King steps down at the end of the month and will be replaced by Canadian Mark Carney who stepped down as Bank of Canada governor last week.

It is widely expected that Carney will try to get the BoE to commit to keeping interest rates low and he is also rumoured to be considering taking a long term view when issuing interest rate guidance.

Carney joins the BoE on 1st July.

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