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The Bank of England, last week, decided to hold interest rates at historic low of 0.50 per cent, remained virtually unchanged for nearly three years, amid a series of economic turbulence for the United Britain for the euro area.

The BoE’s Monetary Policy Committee voted to maintain its economic stimolus, at an altitude of 275 billion pounds to help enhance the ability of banks to lend. The news, in line with market expectations, came shortly before the European Central Bank had slashed interest rates a quarter point, bringing it to 1 per cent, as a consequence of the fact that in the eurozone EU leaders seek to save the euro.


Economists said the Bank of England would like to see lower inflation before injecting more money into the economy and await the outcome of this week’s summit, in order to try to avoid a break in the euro area. Although not a member of the euro zone, Britain, which instead is a member of the European Union, is one of the most important trading partners of the euro area.

The Bank of England decided last October to increase the amount of financial aid, with a new QE of 75 billion pounds, as the economy of Britain still struggling to recover from the recession. The QE, QE, is a process by which central banks create money that is used for the purchase of goods and corporate bonds, in the hope of giving a boost to credit and economic growth.

However, some analysts argue that a new quantitative easing, which is practically printing money, would fuel inflationary pressures. Despite recent falls, inflation remains stubbornly high UK, mainly because of rising energy costs. The official rate of inflation in 12 months declined at a rate of 5 percent in October, while in September was 5.2 percent in September.

Related posts:

1. The Bank of England between inflation and interest rates, Part 2
2. The Bank of England votes to not raise interest rates
3. The interest rate
4. Bank of England kept interest rates at 0.5%
5. The European Central Bank interest rate increase next month

Tags: economic turbulence, england, inflation, interest rate

This entry was posted on Monday, January 9th, 2012 at 6:01 am and is filed under Aritcles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.