Bank holds back from change

Interest rates were kept at the record low of 0.5 per cent while the Bank’s quantitative easing (QE) programme remained at £275bn following the increase of £75bn in October.

The Bank has already acknowledged that it will take until February to administer the recent expansion in its QE programme.

Economists expect a further £50bn of QE from the Bank of England in both the first and second quarters of 2012, taking the total up to £375bn.

While the Bank’s monetary policy committee was forced to sit on its hands yesterday, counterparts on the European Central Bank were considering whether to slash rates from 1.25 per cent.

Even in the last financial crisis, the ECB’s rate never went below one per cent, where it stood for two years until April this year.

After raising rates twice earlier this year under former president Jean-Claude Trichet, the ECB cut rates at new president Mario Draghi’s first meeting last month, fuelling expectations that Europe’s debt crisis will bring about more cuts.

The latest snapshot of the UK economy has made for gloomy reading, with influential think-tank NIESR estimating that growth slowed again in the three months to November to 0.3 per cent, from 0.4 per cent in the three months to October.