Small BusinessBoE holds key rate; to pump in extra 25 bn pounds
Continuing with its soft monetary stance, Bank of England (BoE) today retained the benchmark interest rate at 0.50 per cent for the eight straight month and will inject another 25 billion pounds to boost the economy.
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The British central bank"s move comes a day after the US Federal Reserve decided to continue with the near-zero rate regime.
BoE"s Monetary Policy Committee has voted to maintain the official bank rate paid on commercial bank reserves at 0.5 per cent. The key rate has been retained at the same level since March.
Even though, the US and European economic majors like Germany and France have climbed out of recession, the UK economy continues to remain in a precarious position. The British GDP shrank 0.4 per cent in the September quarter.
To bolster the economy, the apex bank has increased the size of its asset purchase programme, financed by the issuance of central bank reserves, by 25 billion pounds to 200 billion pounds.
When the programme was started in March, BoE had decided to buy 75 billion pounds worth assets and by August, the size was raised to 175 billion pounds.
Regarding the national economy, the central bank said recovery would be slow and the availability of credit is likely to be limited.