Interest rates still at 0.5%, while quantitative easing continues

04 June 2009 / by Rachael Stiles
The Bank of England's Monetary Policy Committee has voted today to keep interest rates at their record low of 0.5 per cent, and agreed to continue with its programme of quantitative easing.

The base rate has now been the same for four months, since it was cut from one per cent to 0.5 per cent in March.

While mortgage customers, especially those on tracker mortgages, will be glad to see that interest rates have not risen, savers and pensioners will once again be disappointed that the returns on their savings, pensions, and investments will not yet improve.

James Caldwell, director at, said that "While no fall means that savings account rates can remain reasonably stable, it does mean that saving rates are unlikely to increase, meaning little joy for those relying on their savings interest for income.

"Pensioners will be particularly disappointed," he said, "because while many people are able to turn to the stock market in search of income, many pensioners may not be willing or able to take the risks associated with it."

Mr Caldwell, like many industry experts and analysts, expects interest rates to remain largely static for the remainder of the year.

The MPC also voted to continue with its asset purchase programme, totalling £125billion, which is being financed with central bank reserves. The Bank expects the scheme to take an additional two months to complete.

Director at the financial website, David Kuo, thinks it is too early to say whether or not the Bank of England's programme of quantitative easing has had any affect. "It is difficult to gauge from a couple of months' figures how lending would have fared without the introduction of Quantitative Easing," he remarked.

"We are not out of the recessionary woods yet. In fact, the road to recovery is seldom clearly labelled, and any signposts we do see can give conflicting signals. This is no time to be complacent."

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