Bank of England maintains interest rate at 0.5%

The Bank of England (BoE), the central bank of Britain, Thursday voted to maintain interest rate at 0.5 percent and the scale of quantitative easing policy at 375 billion pounds (or 610 billion USD), said a BoE statement. The previous change in the benchmark interest rate was a reduction of 0.5 percentage points to 0.5 percent in March 2009, when a program of asset purchases financed by the issuance of central bank reserves was initiated. The previous change in the size of that program was an increase of 50 billion pounds to a total of 375 billion pounds in July 2012. The BoE said the monetary policy committee made its decisions in the context of the monetary policy forward guidance announced alongside the publication of the August 2013 Inflation Report. The committee's latest economic projections will appear in the forthcoming Inflation Report scheduled for publication on Feb. 12. According the guidance, the BoE intends not to raise the interest rate from its current level at least until the unemployment rate has fallen to a threshold of 7 percent, subject to the conditions of price and financial market stability. But as the economic recovery in Britain gaining its muscle, the latest unemployment rate has fallen to 7.1 percent, approaching the triggering point. Capital Economics, a London-based economic research company, said that BoE will hold the interest rate at this ultra low level for a long time, and it seems unlikely that the central bank will abandon forward guidance. "One option is simply to switch the focus to a different variable, such as wages growth or nominal GDP," said Jonathan Loynes, Chief European Economist at Capital Economics.