THE BANK of England left interest rates unchanged at a record low of 0.5 per cent and said it would take another two months to complete its £75 billion quantitative easing programme.

This was the first month that the central bank’s monetary policy committee had left interest rates on hold since last September, having cut them by a total of 4.5 percentage points to tackle Britain’s first economic recession since the early 1990s.

It signalled last month that borrowing costs would not go any lower but it would now resort to pumping money directly into the economy – so-called quantitative easing – to boost demand.

The bank said it had voted to continue with the £75 billion programme to buy government and corporate debt, and would review the decision each month.

“The committee noted that since its previous meeting a total of just over £26 billion of asset purchases had been made and that it would take a further two months to complete that programme,” it said in a statement.

There was little market reaction to the decision. However, some economists said the bank could have provided more details on its quantitative easing programme.

“British business is concerned that, in the face of a severe recession, quantitative easing has not been sufficiently effective so far. Yields on both gilts and corporate bonds will have to fall much further before the policy produces a meaningful unblocking of the credit markets,” said David Kern, chief economist at British Chambers of Commerce.

“Quantitative easing must be implemented in a more transparent way. The Bank of England must spell out what rate of expansion in the money supply they are planning to achieve. To alleviate the downturn, it is important to increase monetary growth amongst industrial and commercial companies and individuals.”

The euro zone’s main refinancing interest rate has some room to go down, European Central Bank policymakers said and indicated there could be debate on how low it can go. They also said additional non-standard measures are being planned and would be announced in May, with ECB member Ewald Nowotny saying buying debt could ease credit availability. – (Reuters)