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BoE keeps rates unchanged, 175 bln stg QE in place

Published 09/10/2009, 07:01 AM
Updated 09/10/2009, 07:06 AM
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LONDON, Sept 10 (Reuters) - The Bank of England left interest rates at a record low of 0.5 percent for the sixth month running on Thursday and said it would keep its 175 billion pound asset buying programme in place.

Most analysts had predicted status quo after last month's shock decision to raise the amount of money the BoE is printing to support the economy -- quantitative easing -- by 50 billion pounds.

But some strategists had seen an outside chance it would either lift the total again -- Governor Mervyn King had wanted even more QE last month -- or cut the interest rate it pays banks holding reserves with it, to encourage them to lend rather than park money at the central bank.

The economic newsflow has been a bit brighter since the BoE's last meeting -- house prices jumped another 0.8 percent last month, according to the Halifax index on Thursday -- and the FTSE-100 index of leading shares is above 5,000 for the first time in 11 months.

Policymakers remain concerned, however, about the durability of any recovery after Britain's deepest downturn in decades.

Output in the second quarter of this year was 5.5 percent lower than a year ago and most commentators are predicting only slow growth through 2010 with unemployment rising for some time to come. (Reporting by Sumeet Desai; editing by Mike Peacock)

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