UK interest rates remain on hold

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 - which at 4.5% is more than double the 2% target.

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.

Meanwhile, no changes were announced to the quantitative easing programme – a scheme designed to boost the economy.

Details of how the Committee voted will be published on 20 July.

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