Threadneedle Street and ECB leave interest rates on hold
THE Bank of England (BoE) yesterday left UK interest rates at 0.5 per cent and announced no further asset purchasing beyond the existing £125bn, which the Bank expects will take two more months to complete.
However, the Confederation of Business Industry’s chief economic adviser Ian McCafferty said fragile monetary and lending conditions mean the Bank is likely to need to continue to use the quantitative easing tool in coming months.
The European Central Bank (ECB) kept interest rates at one per cent but provided more details of its €60bn (£63bn) covered bonds purchase programme revealed last month.
The programme will begin in July 2009 and is expected to be completed by June 2010 and purchases will be distributed across the Eurozone.
Eurozone retail sales rose 0.2 per cent month-on-month in April after four months of declines, due mainly to rises in food, drink and tobacco.
But ECB president Jean-Claude Trichet said yesterday that Eurozone growth will decline throughout 2009, stabilise in early 2010 and will only become positive as of mid-2010.