Thursday, 7 May 2009

Interest rates held at 0.5% again

The Bank of England has announced that interest rates are to be kept at 0.5% for the time being, only the 2nd month that the rate hasn’t changed since last September. This stall in changing the interest rates highlights how highly the Bank of England is prioritising its attempts to encourage banks to start lending again, therefore boosting credit and raising the ‘nominal spending’ (the cash value of spending) in the economy. The Bank of England also reported that some £54bn has already been injected into the economy, with this figure expected to increase to £75bn by the end of June, with overall spending to be extended to £125bn instead of the expected £150bn, as the Bank continues with its ‘quantitative easing’ lending process. Leading economists believe that this smaller extension suggests that, “the recovery is going to plan". Similarly, the European Central Bank (ECB) has cut interest rates in the eurozone (i.e. those countries who use the Euro) to a record low of 1%, down from 1.25%, its 7th cut since last October, in an attempt to help restore economic growth in the eurozone.

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