(13 January 2010 – UK) The Bank of England’s (BoE) monetary policy committee has left the nation’s key interest rate unchanged at the record low rate of 0.50 percent.Despite mounting concerns about higher inflation, the committee also refrained from making changes to its economic stimulus program, which has already seen the government inject £200 billion (A$320 billion) into the economy.
The Bank of England said, in a statement accompanying its decision, that it had voted to maintain the official bank rate paid on commercial bank reserves at 0.50 percent.
‘The committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.’
The British central bank’s main task is to use interest rates as a tool to keep the annual inflation rate close to 2.0 percent and thereby preserve the value of money.
The most recent data showed that British inflation spiked to 3.3 percent in November, up from 3.2 percent in October, on the back of soaring clothing, food and oil costs. December data will be published on Tuesday.
Many experts believe that inflation could hit 4.0 percent this year on the back of domestic energy price hikes, rising commodity markets and the government’s recent increase in sales tax.