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UK interest rates maintained at record low of 0.5%

Friday, July 09, 2010
The Bank of England has kept UK interest rates on hold at a record low of 0.5% for the 16th consecutive month. The Bank's Monetary Policy Committee (MPC) also decided not to inject any more money into the economy under its policy of quantitative easing (QE). The decision had been expected but calls have been growing for an increase in rates to curb inflation. Separately, a leading think tank warned that the UK recovery faced "headwinds" in the wake of last month's Budget. The National Institute of Economic and Social Research (Niesr) estimated that the economy grew by 0.7% in the three months to the end of June, marking a slowdown from the 0.9% expansion seen in the three months to May. Official gross domestic product (GDP) figures for the second quarter will be released on 23 July. Inflation concerns Last month, MPC member Andrew Sentance voted to raise rates to 0.75%, becoming the first committee member to call for a rise since August 2008. Mr Sentance had argued that a rise was needed to bring down inflation. The Consumer Prices Index (CPI) hit a 17-month high of 3.7% in April. It fell back to 3.4% in May but remains well above the Bank's 2% target.