BoE policy makers voted 9-0 to keep interest rates on hold

Minutes of the Bank of England’s June meeting have been released today and have revealed that the Monetary Policy Committee (MPC) voted unanimously this month to keep interest rates at the record low of 0.5%.

As well as the unchanged interest rate, there were no plans to expand the current £125 billion programme of quantitative easing.

While the minutes provided encouraging signs for the economy, the Bank cautioned that confidence remains fragile.

The minutes said: “Overall, the risk of a continued sharp contraction in output in the near term had receded somewhat. However, there was no reason to conclude that the medium-term outlook for the economy, and thus inflation, had changed materially since the Inflation Report had been finalised.”

Commenting on the minutes of the June meeting, Howard Archer, chief UK economist at IHS Global Insight, told The Guardian: “The minutes indicate that, despite the recently improved economic data, the Bank is in absolutely no hurry to raise interest rates from the current record low level of 0.5% and is keeping an open mind on whether it needs to further extend its quantitative easing programme after expanding it by £50 billion to £125 billion in May.”

Mr Archer expects the Bank to keep interest rates at the current historic low of 0.5% for the remainder of 2009 and well into 2010.

In other news today, the Office for National Statistics revealed that UK unemployment continues to rise with the unemployment rate up to 7.2% from 7.1% - the highest since July 1997.

In the three months to April, unemployment increased to 2.26 million - the highest level since November 1996.

Today’s figures confirm reports this week claiming that unemployment will continue to rise - even after the UK has recovered from the recession. Many believe unemployment will rise to around three million by the middle of next year.

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