Bank set to hold rates

By Sumeet Desai

LONDON (Reuters) - The Bank of England looks set to hold interest rates steady this week for the first time since September, as the central bank continues its 75 billion pound asset-buying programme to get the economy out of recession.

The central bank's Monetary Policy Committee cut borrowing costs to a record low of 0.5 percent last month, marking the sixth straight month of rate reductions from a level of 5 percent before its October meeting.

At the same time it also said it would start quantitative easing -- effectively printing money to buy assets such as gilts -- in a bid to get the economy moving again, with Bank Governor Mervyn King strongly hinting there would be no more cuts.

"The official bank rate is about as low as it can go," said Philip Shaw, chief economist at Investec. "Moreover, the Bank of England is still in the midst of implementing the committee's decision last month to buy 75 billion pounds of assets."

"No further monetary policy action looks to be on the cards for a while."

So what are the nine members of the MPC likely to be discussing at their two-day meeting on Wednesday and Thursday?

Most likely, they will be looking at the efficacy of the QE programme so far and trying to get a feel for whether recent data does indeed point to some easing in the rate of decline of the economy, which fell into recession last year.

The Bank has so far bought more than 20 billion pounds of assets, and if it continues at this pace it could use up the 75 billion pounds by early June.