BoE holds key interest rate at record low

LONDON — The Bank of England has voted to keep interest rates at a record low 0.50 percent, it announced on Thursday.The decision came shortly before a separate interest rate announcement due from the European Central Bank which was widely expected to raise its key rate for the eurozone.The British central bank also said in a statement that it has decided against changing its stimulus programme, under which it had injected £200 billion (225 billion euros, $328 billion) into the economy."The Bank of England's Monetary Policy Committee (MPC) today voted to maintain the official bank rate paid on commercial bank reserves at 0.5 percent," it said in a brief statement."The committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion."Thursday's decisions were in line with market expectations, while minutes from the two-day MPC gathering will be published on July 20.The ECB is meanwhile expected to unveil its second interest rate increase since April, probably to 1.50 percent, owing to dogged eurozone inflation running at 2.7 percent.British inflation is also high, running at 4.5 percent on an annual basis, which is the highest level for more than two-and-a-half years.The inflation rate is more than double the BoE's official target level of 2.0 percent, and has been propelled in recent months by surging food and fuel prices.Policymakers would normally raise interest rates to combat high inflation but their hands are tied by stagnant economic growth.Gross domestic product (GDP) grew by 0.5 percent in the first three months of this year. However, that left activity broadly flat over the past six months after a 0.5-percent contraction in the previous quarter."Economic frailty combined with the temporary nature of the current bout of inflation provides little rationale for raising rates at the moment," said economist Scott Corfe at the Centre for Economics and Business Research."Unless economic prospects in the UK show a sharp improvement over the

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