UK interest rates held at 0 5

The Bank of England has decided to keep interest rates at a record low.

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By :  ,  Financial Analyst

The Bank of England has decided to keep UK interest rates at a record low of 0.5 per cent for another month.

Members of the Bank's Monetary Policy Committee (MPC) voted to hold interest rates keeping them unchanged since March 2009. The goal is to stimulate the country's economic recovery and also to maintain the quantitative easing programme. The Bank wants to boost lending in the economy after a spend of £375 billion.

In October, the Bank warned there could be potential for an increase in rates in the near future. While the decision was made to keep interest rates at their record low there was a split in the MPC, the first since 2011. Ian McCafferty and Martin Weale voted in favour of a 0.25 per cent rise to 0.75 per cent but were subsequently outvoted.

At the time, the Bank's governor Mark Carney hinted that there could be a change in the record low figures either towards the end of 2014 or into next year. Analysts now believe there could be a change in rates prior to the general election in May 2015.

Howard Archer, an economist at IHS Global Insight, said: "It would now be a surprise if the Bank of England raised interest rates before the latter months of 2015, especially given the disinflationary pressures coming from very low oil prices.

"It looks highly improbable that there will be an interest rate hike before the May 2015 general election."

Chancellor George Osborne set out plans for the economy in the Autumn Statement, delivered on Wednesday (December 3rd). Mr Osborne said that the UK's economy will grow by three per cent by the end of the year, an improvement on the 2.7 per cent previously predicted. He added that it will grow by a further 2.4 per cent in 2015.

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