Bank of England leaves policy unchanged

LONDON Thu May 9, 2013 12:06pm BST

1 of 2. Pedestrians walk past the Bank of England in the City of London February 23, 2013.

Credit: Reuters/Neil Hall

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LONDON (Reuters) - Bank of England left rates on hold and did not extend its bond purchases on Thursday, opting to wait and see if recent initiatives to boost lending will lift the struggling economy.

Its decision to leave its key rate at 0.5 percent and the stock of bond purchases at 375 billion pounds was widely expected by economists, who believe the central bank is shifting its focus away from bond purchases towards schemes to support the flow of credit.

The Bank announced a major expansion of its "Funding for Lending Scheme" last month to give bigger incentives for banks to lend to small businesses.

Many of the Bank's policymakers may also be keen to see what ideas Mark Carney has for kick-starting growth when he replaces Mervyn King as governor in July.

After months of dreary headlines, economic news has brightened over the past few weeks. Britain's economy grew a faster-than-expected 0.3 percent in the first three months of the year and surveys suggest the recovery gathered pace at the start of the second quarter.

Inflation in Britain is running at 2.8 percent, and has been above the central bank's 2 percent target for much of the past five years. However, the outlook has become less threatening thanks to a slide in commodity prices and a rise in the value of sterling over the past two months.

The central bank will publish updated growth and inflation forecasts next week which will give insight into its thinking.

(Reporting by Christina Fincher and David Milliken. Editing by Jeremy Gaunt.)

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Comments (2)
GlobalFamily21 wrote:
Better to hold for some more time as there are only some green shoots. Celebrities could not bring speedy recovery. For that we need talented, capable and committed leadership to put the economy under control and gain customer satisfaction. Customer is the “KING” not the slave. No market, No economy, No growth and No recovery if we ignore the vital element “The People”-”The Market”- “The Customer”. This is the simple reason why the Global Family suffered for more than 6 years. If the authorities sleep under the snow then it will again take more than 4 years for an automatic recovery.

May 09, 2013 11:07am BST  --  Report as abuse
stevecole wrote:
Growth comes from having good products and services at a price people want to pay, delivered on time. They also have to be sold by honest salesman who have the energy to get out there and spread the word. This creates real wealth that no amount of financial alchemy can achieve in the long term.

May 09, 2013 11:27am BST  --  Report as abuse
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