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June 9, 2011    

UK interest rates remain on hold

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by Kay Murchie
”UK

The Bank of England’s Monetary Policy Committee (MPC) has today elected to keep UK interest rates on hold at the historically low level of 0.5%, as widely expected.

Interest rates have now been at this low level since March 2009 – when the economy was in the midst of recession.

Recent figures show the economy appears to be faltering so it was thought that the central bank may be reluctant at this stage to lift interest rates as the recovery is losing momentum.

However, the Bank has recently come under pressure to lift rates as it is forced to combat stubbornly high inflation.

Inflation is currently running at more than double the target of 2% but the Bank of England has said inflation will fall back to its target by 2012.

Inflationary pressures are rife throughout the world and many central banks are opting to lift rates to tame inflation.

Meanwhile it was the first meeting for Ben Broadbent, a Goldman Sachs economist. He replaced Andrew Sentance when his term ended on May 31.

Mr Sentance has, since last June, voted for interest rates to be lifted from their historic low.

Finally, the Bank did not reveal any changes to its quantitative easing programme.

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