In its policy meeting, the BoE decided to keep interest rates unchanged in order to support the economy in its recovery. Further, the central bank left its asset purchase programs unchanged and continued to pursue quantitative easing as the economy claws its way back from the worst post-world war recession.
The central bank however contended that it would consider the upcoming quarterly economic health check report before deciding on any changes to its current stance. Though the recent retail sales and sixth consecutive uptick in house prices as revealed by data provided by Halifax, showed signs improvement in the economy, the recent stance comes amidst concerns of further deterioration in the economy once it’s taken off the liquidity support programs. Though the economy officially emerged from recession with a better-than-expected GDP growth during the last quarter, unemployment continues to stay at elevated levels, leaving the economy susceptible to an unwarranted pullback.
Amidst the sub-prime led credit crisis, which consequently paved way for recession, the central bank aggressively cut its interest rates to support the economy. This has left the interest rates at ultra-low level of 0.5 %, the lowest in the history of the central bank. Moreover, along with lower interest rates the bank has been purchasing assets in order to provide the economy with the much needed liquidity.