LONDON (AP) — The Bank of England on Thursday held its key lending rate at the all-time low of 0.5 percent for the 42nd month and announced no new stimulus measures as it monitors the impact of a recent injection of money into the economy.
The announcement by the Bank's Monetary Policy Committee was widely expected, and financial markets remained steady on the news.
The central bank only last month approved a new round of stimulus — made by buying asset like government bonds from banks — that is expected to be completed in November. With the country stuck in recession for three quarters, some analysts expect a further shot of stimulus after that.
So far, the Bank has authorized 375 billion pounds ($583 billion) for the program, in which it buys assets from banks with newly created money. That increases the overall amount of money in the financial system, with the hope that banks will use the cash to give loans, helping economic activity.
GDP fell by 0.7 percent in the second quarter, according to the Office for National Statistics, and pressure has grown on the government to do more to stimulate recovery.
"The economic data must surely be an increasing cause of angst among policymakers," said Chris Williams, chief economist at financial data company Markit. He noted that a survey published Wednesday showed manufacturing output dipping to the lowest level in 38 months.
The recent run of feeble data has been blamed in part on cold wet weather through the second quarter and an extra holiday in June to celebrate the 60-year reign of Queen Elizabeth II.
The Bank's quarterly inflation report, which will be released next week, will be closely examined for clues to possible changes in policy, with several analysts expecting a further round of stimulus to be announced in November. A rate cut, which the MPC had discussed at its last monthly meeting in July, is also a possibility.
"The poor second quarter GDP data make it hard for the Bank of England not to loosen monetary policy further," said Alan Clarke, economist at Scotiabank.
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