Business

UK interest rates kept at 0.5% for 15th month

Bank of England
Image caption Many economists do not expect a rise in rates until 2011

UK interest rates have been kept on hold at a record low of 0.5% for the 15th month in a row.

The Bank of England also decided not to inject any more money into the UK economy under its policy of quantitative easing (QE).

Interest rates have now been at 0.5% since March 2009.

Meanwhile, a Reuters poll of 61 economists suggested the central bank would not raise rates until next year.

Trevor Williams, chief economist at Lloyds Banking Group Corporate Markets, said the decision was "no shock at all".

"The story is the economy is still very weak," he said.

Inflation in April hit its highest rate in 17 months. On the Consumer Prices Index (CPI) measure, inflation hit 3.7% - well above the Bank's target of 2% and the highest rate since November 2008.

The Bank uses interest rates to try to curb inflation, but Mr Williams said: "The target was never meant to be hit every single month. It's a medium-term target. And I think they're quite right to hold off.

"I think [inflation] will fall back later in the year."

However, last month a leading economic think tank warned that rates would have to rise to control inflation.

The Organisation for Economic Co-operation and Development (OECD) called for the Bank of England to raise the cost of borrowing to 3.5% by the end of 2011.

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