Interest Rates Remain At Record Low

09 October 2014

The Bank of England has held UK interest rates at a record low of 0.5%, a rate first set in March 2009.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.

There has been intense speculation over when the Bank will start to raise rates again. Markets are expecting an increase some time in the new year, although some commentators think it could be later this year as the Bank may not want to raise rates close to a general election, scheduled for May 2015.

The UK economy has been growing strongly this year - with GDP rising by 0.9% between April and June, following a 0.7% rise in the previous quarter - and is on course to outperform many other developed economies this year.

However, recent figures have suggested that growth in the manufacturing sector is beginning to slow, partly due to a slowdown in the Eurozone economy.

Stronger growth in the UK this year has not filtered through to inflation, which fell to 1.5% in August. With inflation below the Bank's target rate of 2%, there is less pressure to raise rates to curb rising prices.

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