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Bank holds rate and £200bn QE level

The Bank of England has held the base rate at 0.5 per cent and continues with its quantitative easing strategy.

The Monetary Policy Committee has decided to hold the base rate at its all-time low for the 10th consecutive month. It has also decided to continue to buy gilts as part of its £200bn quantitative easing programme.

Legal & General director of mortgages Ben Thompson says: “It might be a New Year but monetary policy on interest rates stays the same. This could well be the case throughout the whole of 2010 as the first interest rate rise might not be until next year. However, a year is a long time and inflationary pressures could change the landscape quite dramatically – the normal rules don’t necessarily apply and there is a risk that the Bank of England has already pumped too much fuel into the engine.”

RBS head of group economics Stephen Boyle says: “As expected, policymakers decided to continue the course they set in November. The tough decision will come in February: recent signs of improvement may be sufficient to take a pause, but there is still an argument for a further stimulus to try and cement the recovery.”


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