The Bank of England held interest rates at record lows as policy-makers weighed up the impact of a Eurozone bailout and a hung parliament. The Bank's Monetary Policy Committee voted to hold rates at 0.5% and left its £200 billion program to boost the money supply unchanged.
The widely expected decision came as European leaders agreed to prop up the Euro and prevent Greece's sovereign debt crisis from spreading, while talks over a possible coalition in Britian continue following last week's indecisive election.
Despite worries over inflation, the current political and economic uncertainty will have reinforced the Monetary Policy Committee's (MPC) “no change” stance with the UK making a fragile recovery from recession.
According to official estimates, UK growth slowed to 0.2% in the first quarter of 2010—but the MPC was unnerved last month by a bigger-than-expected rise in the benchmark Consumer Prices Index (CPI) in March to 3.4%—well above its 2% target.
The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The most recent change in the size of that program was an increase of £25 billion to a total of £200 billion on 5 November 2009.