Interest rates unchanged at 0.5 per cent

No-one is surprised.

Governor of the Bank of England, Mervyn King. Credit: Getty Images

The Bank of Engand's monetary policy committee (MPC) has voted to keep interest rates at 0.5 per cent for another month, with the Bank in the third year running with no change. It last moved on 5 March 2009, when rates were cut by 0.5 per cent down from 1 per cent.

Bank of England rates from 1694, Historical, UK from Timetric

The MPC also voted to continue with its quantitative easing program as planned, injecting a total of £325bn into the economy through the purchase of central bank assets.

None of this is remotely surprising. The economy is in a worse state than it was this time last year, and the Bank did nothing then either; if anything, given the level of inflation, the interest rate is slightly too high. The problem is that interest rates don't really work any lower than 0.5 per cent, and for obvious reasons can't go lower than zero. So the monetary policy the bank can bring to play is severely curtailed.

Expect the interest rates to stay low for some time to come.