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Thursday October 8, 05:00 PM
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BoE leaves rates at 0.5 pct
LONDON (Reuters) - The Bank of England left interest rates at a record low of 0.5 percent for the seventh month running on Thursday and said it would keep its 175 billion pound asset buying programme in place.
Focus will now switch to the November meeting when the Monetary Policy Committee will have new economic forecasts, though most analysts do not expect the BoE will change policy then either given Britain may now be emerging from recession.
But a sizeable minority still see a further expansion of the quantitative easing programme which pumps money into the economy because any recovery is likely to be fragile.
BoE Governor Mervyn King had actually wanted to raise the QE total to 200 billion pounds in August but, along with two other members, was outvoted by the rest of the MPC.
In either case, policy is likely to remain ultra-loose for months yet as policymakers around the world have been stressing now is not the time to withdraw the extraordinary support they have ploughed into their economies over the last year.
British economic output in the second quarter of 2009 was 5.5 percent lower than a year ago and policymakers are worried it will take years for the level of GDP to get back to where it once was, entailing huge job losses in the interim.
And while most recent data have pointed to the worst being over for the economy, figures this week showing a shock 1.9 percent fall in August manufacturing output raised doubts over whether the economy started growing again in the third quarter.
Thursday marks the first anniversary of the major central banks' surprise coordinated rate cut to bolster confidence after the collapse of Lehman Brothers.
The European Central Bank is also expected to hold interest rates at a record low of 1 percent when it announces its decision at 1145 GMT.
(Reporting by Sumeet Desai; editing by Mike Peacock)
(For more news on Reuters Money visit http://www.reutersmoney.in)
