Bank of England says leaves main interest rate at 0.50%

The Bank of England said on Thursday it had voted to keep its key interest rate at a record-low 0.50 percent and to maintain its level of quantitative easing cash stimulus pumped into the British economy.

"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.50 percent," it said, adding that QE would remain at £375 billion ($602 billion, 459 billion euros).

The central bank's reasons behind the widely-expected decisions were to be outlined in minutes of the regular two-day meeting due for release on January 23.

With Britain's economy likely to have contracted in the final quarter of last year, the Bank of England (BoE) is forecast to keep interest rates at 0.50 percent for some time but may soon decide to increase QE, analysts say.

Following the 2008 global financial crisis, the BoE slashed its main lending rate to an all-time British low point of 0.50 percent, where it has stood for almost four years.

Also since March 2009, the central bank has pumped £375 billion of new cash into the economy under its stimulus programme.

Under QE, the Bank of England creates cash that is used to purchase assets such as government and corporate bonds from banks with the aim of increasing lending by retail banks and boost economic activity.

Latest official data showed that Britain's economy grew by 0.9 percent in the third quarter of 2012 -- but boosted by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II's Diamond Jubilee.

Experts believe that fourth-quarter data could show Britain's economy contracted in the final months of last year, putting it on course for a "triple dip" recession.

Britain sank into the first phase of a double dip recession in 2008 as a result of the devastating global financial crisis that sparked a number of vast banking bailouts.

The economy rebounded in late 2009 but struggled to stage a convincing recovery and fell back into a second downturn in late 2011, which lasted for three quarters, as the eurozone crisis loomed large. Britain is not a member of the single currency bloc.

Activity in Britain has meanwhile been hit hard also by deficit-slashing austerity measures from the nation's Conservative-Liberal Democrat coalition government.

--

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