Bank of England holds key rate at 0.5%

The Bank of England has kept its key lending rate at 0.5 per cent and decided not to increase its economic stimulus programme of bond purchases.

Thursday's decision by the Monetary Policy Committee was widely expected.

Analysts believe there will be no move to increase the amount of bond purchases — known as quantitative easing — before November, when the most recent commitment of £50 billion ($80 billion) is spent. The total investment in quantitative easing is now £375 billion.

The Bank is also closely watching the effect of an £80-billion programme to encourage more bank lending.

Britain has been in recession for the last three quarters.

The Organization of Economic Cooperation and Development said Thursday it expected British GDP to contract by 0.7 per cent this year.

- AP