Bank of England keeps interest rate at 0.5 percent; maintains stimulus size

Nathan Andrada – Fourth Estate Cooperative Contributor

London, England, United Kingdom (4E) – The Bank of England (BoE) has extended its record-low interest ratesof 0.5 percent for another month, while it kept the size of its economic stimulus program, also known as quantitative easing, unchanged at 375bn British pounds.

Strong economic growth in Britain has increased speculation that the country’s central bank will be the first among developed economies to end crisis-era policies and start raising borrowing costs.

The UK economy expanded by 0.8 percent in the first quarter of 2014, marking the fifth consecutive quarter of growth. Keeping rates at historic lows becomes less imperative as confidence with the strength of the economy grows.

Since March 2009, the BoE has maintained interest rate at their record low level of 0.5 percent.

The number of jobless people in the country is also declining, with the unemployment rate dropping to 6.6 percent in the three months to May.

Meanwhile, there is no urgency for the central bank to raise rates to keep prices in check, with the inflation rate dropping to 1.5 percent in May, lower than the previous month’s 1.8 percent. The BoE’s inflation rate target is 2 percent.

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