The Bank of England announced today that the UK Bank Interest Rate is to remain at an all-time low of 0.5%. This is the sixty eighth month in which the Monetary Committee has met and voted to keep the rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of Central Bank reserves at £375 billion. The announcement follows the broadcast of the Leverage Ratio which is viewed as a sturdy measure of the bank’s strength. Introduced was a minimum leverage ratio requirement, a supplementary leverage ratio buffer and a countercyclical leverage ratio buffer.
The Bank of England cut interest rates to a record low of 0.5% in March 2009 at the height of the financial crisis and has voted to keep them there ever since. Ben Broadbent, the Deputy Governor for Monetary Policy at The Bank of England said that ‘rates are likely to stay low for some time yet’.
The Interest rates environment Worldwide is also currently low, The European Central Bank has cut its benchmark interest rate to 0.05% and has introduced new stimulus measures. The outlook of increased interest rates seems bleak, the rate is predicated to stay low for the next few months but there is speculation. According to the National Institute of Economic and Social Research, The Bank of England will hold interest rates at the historic low until after the General Election next year. NIESR also forecasts that interest rates will rise from the current level of 0.5% to 1% by the end of 2015 before rising gradually to 2.75% by the end of 2019.
Please see here for the Bank of England’s statement