Bank of England Holds Bank Rate at 0.50%, APP at 275B

The Bank of England (BoE) maintained the Bank Rate at a record low stimulatory level of 0.50%, and continued with its Asset Purchase Program (Quantitative Easing) target of GBP 275 billion, after increasing it by 75 billion at its October meeting.  On its asset purchase program, the Bank said: "The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review."

The Bank also announced the introduction of the Extended Collateral Term Repo (ECTR) Facility.  The Bank said: "This Facility is designed to mitigate risks to financial stability arising from a market-wide shortage of short-term sterling liquidity" and added "there is currently no shortage of short-term sterling liquidity in the market."

The Bank also held the official Bank Rate unchanged at 0.50% at its October meeting this year; the rate has remained on hold since March 2009, when the Bank reduced the interest rate by 50 basis points to 0.50%.  The United Kingdom reported annual consumer price inflation of 5.2% in September, 4.5% in August, and 4.4% in July, and still above the Bank's inflation target of 2.00%.  

The UK saw quarterly GDP growth of 0.5% in Q3 this year (0.1% in Q2, 0.5% in Q1), while annual economic growth was reported at 0.5% (0.7% in Q2, 1.6% in Q1).  The British pound (GBP) is basically flat against the US dollar so far this year, while the USDGBP exchange rate last traded around 0.64.

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