UK interest rates remain unchanged at 0.5%
The Bank of England has elected to keep interest rates unchanged at 0.5% today for the fifth month in a row.
Rates currently stand at the lowest level since the Bank was established over 300 years ago.
Meanwhile, the Bank has announced plans to increase its quantitative easing (QE) programme to £175 billion – a rise of £50 billion.
QE, also known as printing money, is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital.
In the meantime, there have been signs that economic conditions may be improving after a run of good news this week. Today, the ailing car industry received a major boost after figures from the Society of Motor Manufacturers and Traders (SMMT) revealed a rise in new car sales.
The SMMT said a total of 157,149 new cars were registered in July, up 2.4% when compared with July last year, due to a rise in private buyers, which grew for the second successive month, by 33.4%.
Also this week, sterling rose against the US dollar to the $1.70 mark – its highest level since October last year, this was primarily due to figures from the Office for National Statistics which showed that industrial output rose unexpectedly in June by 0.5% compared with May.
While industrial output is still down 11.1% on an annual basis, the rise was at the fastest pace since October 2007, due to a surge in car production.
In the meantime, a survey this week from the Chartered Institute for Purchasing and Supply (CIPS) showed that activity in the UK’s services sector (the engine room of the country’s economy) also rose unexpectedly in July.
In addition, the Halifax revealed yesterday that the housing slump may be nearing an end after house prices rose 1.1% in July.
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