Bank of England remains interest rate at 0.5%

The Bank of England (BoE), the central bank of Britain, Thursday voted to keep its main interest rate unchanged at 0.5 percent, and keep its bond-buying economic stimulus scale at 375 billion pounds (634 billion U.S. dollars). The decision is within the market's estimation consensus. The BoE cut the interest rate to a record low of 0.5 percent in March 2009, in order to deal with impact brought about by the financial turmoil and eurozone sovereign debt crisis. Earlier this year, the BoE had revised its forward guidance policy framework, by scrapping its seven percent unemployment target, and introducing nearly 20 economic indicators to determine its monetary policy movement, as the unemployment rate has been dropped to 6.9 percent. Economists predicted that the central bank would not raise the benchmark interest rate in a near-term. While the strength of the housing market may have made for an animated discussion at today's meeting, the benign inflation outlook suggests that tighter monetary policy is still not a near-term prospect, said Capital Economics, a British think tank. "With a number of the bank's Monetary Policy Committee members recently suggesting that the housing market poses a significant threat to the Britain's financial stability, the current pace of house price inflation is the elephant in the room. The Bank is likely to use its macro-prudential tools, possibly as soon as June's meeting of the Financial Policy Committee, before deploying the blunt instrument of an interest rate rise," said Martin Beck, senior economic adviser to the EY ITEM Club. "Next week's Inflation Report should provide more enlightenment, pointing, in our expectation, to rates remaining very low for some time yet." The bank's latest economic projections will appear in the forthcoming Inflation Report to be published on 14th May.