MercoPress. South Atlantic News Agency

Bank of England leaves rate unchanged as it prepares to receive Mark Carney

Mervyn-King steps down at the end of June

The Bank of England on Thursday voted to keep its main interest rate at 0.5% following a monetary policy meeting, the last for departing Governor Mervyn King. The BoE also decided against creating more cash under its Quantitative Easing (QE) program that is aimed at boosting growth amid Britain's fragile economic recovery.

“The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 percent,“ the central bank said following an ordinary two-day meeting.

”The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion (580 billion dollars)“.

Minutes of the monthly meeting, explaining the reasons behind the voting pattern of the Committee's nine members including King, will be published on June 19, the statement added.

King, who has led the Bank of England for a decade, will at the end of the month make way for Mark Carney, who last week stepped down as governor of the Bank of Canada.

The BoE has kept its main interest rate at a record-low 0.50% and has pumped a total of £375 billion into Britain's economy under QE since early 2009.

Under QE, the Bank of England creates cash that is used to purchase assets such as government and corporate bonds with the aim of boosting lending and in turn economic activity.

QE can stoke inflation however as it is tantamount to printing money and although the British economy escaped a return to recession in the first quarter, the country stands a long way from producing strong growth according to market watchers.

Britain expanded by 0.3% in the first quarter of 2013, recent official data showed, returning to growth and avoiding its third recession since the 2008 global financial crisis.

Gross domestic product grew in the January-March period, after falling by 0.3% in the final three months of 2012.

That still left the economy essentially flat over the past six months, but it did avoid entering recession -- which is defined as two consecutive quarters of shrinking economic activity.

King in May called for £25 billion more QE stimulus cash at his penultimate meeting, but was out-voted for the fourth month in a row, minutes showed.

British 12-month inflation slowed to 2.4% in April, hitting a seven-month low point on the back of falling transport costs and oil prices, official data showed.

The BoE has meanwhile forecast that the economy is set to grow faster than expected in the coming months, while stressing the weak nature of the recovery.

The International Monetary Fund last month said that Britain was a long way from a ”sustainable recovery”, and called for the government to boost infrastructure spending to accelerate economic growth and offset austerity.