Threadneedle Street and ECB leave interest rates on hold

City PM Published Jun 4, 2009 Reviewed Jul 2, 2026 ✓ Reviewed by citations.press editors

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The Bank of England kept UK interest rates at 0.5% and has £125bn of asset purchases remaining, expected to take two more months to complete.

0.5 percent · UK interest rates125 billion · existing asset purchases2 months · time to complete asset purchases

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The European Central Bank kept interest rates at 1% and launched a €60bn (£63bn) covered bonds purchase programme.

1 percent · ECB interest rates60 billion · covered bonds purchase programme63 billion · covered bonds purchase programme

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The ECB's €60bn covered bonds purchase programme will begin in July 2009 and is expected to be completed by June 2010.

2009 · programme start year2010 · programme end year11 months · duration of covered bonds purchase programme

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Eurozone retail sales rose 0.2% month-on-month in April after four months of declines.

0.2 percent · Eurozone retail sales growth4 months · duration of prior declines

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Ian McCafferty, chief economic adviser at the Confederation of Business Industry, said fragile monetary and lending conditions mean the Bank is likely to need to continue using quantitative easing in coming months.

about 0 months · duration of continued quantitative easing use

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ECB president Jean-Claude Trichet said Eurozone growth will decline throughout 2009, stabilise in early 2010, and only become positive as of mid-2010.

2009 · period of decline2010 · period of stabilisation2010 · period growth turns positive

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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.

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