No change in base rate or QE

The Bank of England has decided to hold the base rate at 0.5% and not extend its quantitative easing programme.

The Bank of England has kept the base rate on hold at its historic low rate of 0.5% – for another month at least.

The rate-setting Monetary Policy Committee (MPC) discussed cutting the base rate to 0.25% during its July meeting.

The bank has also decided not to extend its quantitative easing (QE) programme, where it buys up government bonds (also known as gilts). It has already bought up £375 billion-worth as it attempts to kickstart the economy.

There has been a raft of poor economic data recently, including figures from the Office for National Statistics would showed that GDP had fallen by 0.7% between April and June this year.

In a poll here on lovemoney earlier this week, 58% of people who responded said they thought the base rate should be cut.

Last month the MPC announced a further £50 billion round of QE in an attempt to get banks lending more.

The Funding For Lending scheme announced in June is also now underway, with banks able to access loans at cheaper interest rates from the Bank of England, in turn cutting borrowing interest rates for us.

The MPC appears to be waiting to see what effect these initatives have before doing anything more radical.

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