Bank of England keeps benchmark rate at record low

The central bank has for five years used low interest rates and bond-buying.
EPA/File 2014
The central bank has for five years used low interest rates and bond-buying.

LONDON — The Bank of England on Thursday decided to leave its benchmark interest rate unchanged at a record low. Britain’s central bank said it would keep the rate at 0.5 percent, where it has been since March 2009.

The bank also left unchanged its stimulus program of holding $627 billion in government bonds that it has purchased over the past five years.

“There was no surprise at all to this decision,” said David Tinsley, chief UK economist at BNP Paribas. “The UK economy is in a sweet spot with solid growth and falling inflation, so there is no pressure on the Bank of England to take policy action at the moment.”


Britain’s economy grew 0.7 percent in the fourth quarter, after 0.8 percent growth in the third quarter, outpacing much of continental Europe. Inflation in January was 1.9 percent, slightly weaker than expected. Slowing inflation in the eurozone — at an annual rate of 0.8 percent — was not a deep enough concern for the European Central Bank to change tack Thursday, when it said it would keep interest rates at their current low of 0.25 percent.

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The Bank of England said it was reinvesting 8.1 billion pounds from government bonds held in its program that came due this month.

Strong data, including lower-than-expected unemployment, has put the bank in a bit of a bind. The unemployment rate in Britain was 7.2 percent in the fourth quarter.