Bank of England Base Rate To Remain AT 0.5%

Bank of England Base Rate To Remain AT 0.5%

The Bank of England’s (BoE) Monetary Policy Committee (MPC) again voted to maintain the bank base rate at 0.5% last week.

The MPC have agreed to keep the bank rate at 0.5% for the foreseeable future.

The bank rate has stayed at 0.5% since 5 March 2009, a long-term low of over three and a half years. This means that interest rates on savings are low, but that in some instances mortgage payments have become lower and more affordable.

The Monetary Policy Committee also voted to continue with its programme of asset purchases totalling £375 Billion (GBP), financed by the issuance of central bank reserves.

According to the Bank of England, the Committee expects the announced programme of asset purchases to take another month to complete, and that the scale of the programme will be kept under review.

The last previous change in the size of the Asset Purchase programme was an increase of £50 Billion (GBP) to £375 Billion (GBP) on 5 July 2012.


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What is the MPC?

MPC stands for Monetary Policy Committee. There are 9 members on the committee; the Bank of England governor, the two Deputy Governors, the Bank’s Chief economist, the Executive Director for Markets and four external members appointed by the Chancellor. Each member has an expertise in the field of economics and monetary policy and they meet once a month to set the interest rate.

What is the base rate?

The base rate is the interest rate set by the Bank of England for lending to other banks. This is determined at the Monetary Policy Committee monthly meeting.

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