Financial News

  • 8 August 2014, 10:03

BoE Holds Interest Rate At 0.5%

The Bank of England has kept interest rates at a record low of 0.5%.

Its quantitative easing (QE) programme has also remained unchanged at 375bn.

It comes as policy makers met for the first time since figures showed strong economic growth in the UK.

The interest rate has remained at the historic low since 2009.

As Britain's economy is set to grow by more than 3% this year, it has fuelled expectations that the BoE will be the first central bank in a major developed economy to raise rates.

Some have forecast the hike could come as early as the autumn, while it is widely anticipated to happen in the first part of 2015.

More clues of when exactly the rate rise will come may be seen next week when the Bank releases its quarterly inflation report, detailing its latest outlook for the economy.

Meanwhile, the European Central Bank (ECB) has also kept its interest rate the same.

It was cut to a record low of 0.15% in June.

It comes after shock news that Italy slipped back into recession in the second quarter, leading to calls for EU budget reforms.

Germany also experienced a setback as factory orders fell for the second consecutive month in June, dropping by 3.2% compared with May.

It is further evidence that the eurozone crisis rumbles on, as political tensions in Ukraine and Russia also threaten the area's economic outlook.

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