No change on rates from Bank of England

Thursday 07 February 2013 19.17
UK interest rates stay at 0.5%
UK interest rates stay at 0.5%

The Bank of England held off from further emergency support today, despite the threat of a triple-dip recession hanging over the UK economy.

Policymakers remained in "wait and see" mode again this month, holding rates at their record low of 0.5%.

It also maintained the Bank's quantitative easing programme at £375 billion sterling.

Recent figures estimate the economy slipped back into the red in the final three months of last year.

But the Bank's Monetary Policy Committee is hopeful that its Funding for Lending Scheme (FLS) and a recent fall in the price of sterling will boost the recovery.

Its hopes for the turnaround were given a boost today after the Office for National Statistics reported a 1.6% rise in manufacturing output for December, a figure ahead of City expectations.

The increase in production was in part fuelled by rising exports as the UK's goods trade deficit narrowed to £8.9 billion in December. The figure remains high by historical standards as the UK attempts to rebalance towards being an export-oriented economy.

The Bank of England's multibillion-pound FLS scheme, where it provides cheap money to lenders, has shown some encouraging signs of providing firepower to the economy after Halifax house prices recorded their strongest quarterly rise in three years this week.

But today's decision prolongs the agony for savers, who are unlikely to see any respite from painfully low interest rates for the foreseeable future. Investment banking giant Citi recently said it believed rates would be held at historic lows until mid-2017.