The Bank of England’s base rate remains at 0.5%.

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Base Rate at 0.5%, which has remained at this level since its reduction back in March.

It also voted to continue with its programme of asset purchases totalling £175 billion, financed by the issuance of central bank reserves, expected to take another two months to complete, and with the scale of the programme kept under review.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. On the same day, a £75bn programme of asset purchases financed by the issuance of central bank reserves was initiated. The programme was increased to a total of £125bn on 7 May 2009 and to a total of £175bn on 6 August 2009.

This process of quantitative easing is intended to encourage individual banks to expand their balance sheets – moving their reserves into something that offers a higher return, such as making new loans – and so increasing the supply of money in the economy.

There have now been calls from economists for the rates to be cut to less than zero in order to dissuade banks from holding onto the cash being pumped into the economy and lend it to individuals and companies instead.

The Bank has also warned that recovery is likely to be “slow and protracted” and that it would take months for the full impact of its policies to be felt.

In other news reported this week, optimism about the outlook for the UK economy has pushed the FTSE 100 index above 5,000 points for the first time since October 2008 ^[1] and the Halifax has reported that house prices rose by 0.8% last month  ^[2] compared with the previous month - the second consecutive month that prices have risen.

The minutes of the Monetary Policy Committee meeting will be published at 9.30am on Wednesday 23 September.