Bank of England votes against additional stimulus

The Bank of England has kept its base interest rate at the all-time low of 0.5 per cent and decided to not go in for additional monetary stimulus, despite worries over Britain's sluggish economy.

With the UK economy officially in recession following two quarters of falling gross domestic product, some analysts had suggested that the committee might have been tempted to approve additional stimulus.

With the announcement from the Bank's Monetary Policy Committee, the country's stimulus programme of asset purchases would continue to total £325 billion.

The British government as also the central bank had last month been asked by the International Monetary Fund (IMF) to take additional measures to boost economic activity.

Minutes of committee meetings released recently show that the stimulus issue had been thoroughly debated though only one of the nine members had voted to support the expansion of the programme of asset purchases known as quantitative easing.

According to Howard Archer, European economist at IHS Global Insight, "it may well have been a very close call" on whether to approve additional stimulus.

It would not be surprising if the quantitative easing issue were to come to the fore again, which could happen as soon as July if the economy failed to show any fundamental improvement, or events in the euro zone were to negatively impact UK sentiment and activity beyond a point, he added.