The Bank of England (BoE) this week again decided to keep the bank’s interest rate at 0.5%, the historical low initiated in March 2009.
It has also decided to maintain the size of the Asset Purchase Programme, aka quantitative easing.
There has been some calls for the interest rate to rise by members of the Monetary Policy Committee over the last few months due to the pressure on the economy by increasing inflation.
However the Bank has previously indicated that it believes the inflationary pressures to be temporary and skewed by various one off factors.
It is also clear that the maintenance of such a low interest rate is helping to keep some stability within the housing market, meaning that affordability of mortgage payments is now at 28%, down from the peak of 48% in mid-2007.
For more information visit: http://www.bankofengland.co.uk/publications/news/2011/067.htm