Bank of England keeps interest rate at 0.5%: official

[LONDON] The Bank of England voted to keep its main interest rate at 0.50 per cent, it announced on Thursday, against a backdrop of sliding British inflation.

The BoE, holding its first policy meeting of the year, decided also to keep the level of its cash stimulus pumping around the economy at £375 billion (US$565 billion), a statement said.

"The Bank of England's Monetary Policy Committee at its meeting today voted to maintain Bank Rate at 0.5 per cent," it said.

Reasons behind the decisions will be set out in the meeting's minutes to be published on January 21.

"As fully expected the Bank of England kicked off 2015 by keeping interest rates down at 0.50 per cent," said Howard Archer, chief UK economist at the IHS Global Insight research group.

"It would currently be a major surprise if the Bank of England raised interest rates before the final months of this year given the current disinflationary impact of very low oil prices and the risk that UK growth could be hampered by mounting political uncertainty ahead of May's general election and problems in the eurozone," he added.

Inflation in Germany, Europe's biggest economy, hit a five-year low in December, data showed this week, turning up the heat on the European Central Bank to do more to ward off the threat of deflation, or falling prices, in the eurozone.

Inflation is sliding also in Britain, with the annual rate reaching a 12-year low point of 1.0 per cent in November.

Meanwhile ahead of Britain's general election due in May, the country's economic growth has shown signs of cooling.

Britain, though not a member of the eurozone, counts the neighbouring bloc as its biggest trading partner.

AFP