BoE holds rates at 0.5 percent

The Bank of England left interest rates unchanged at a record low of 0.5 percent on Thursday, and said it would take another two months to complete its 75 billion pound quantitative easing program.

This was the first month that the central bank's Monetary Policy Committee had left interest rates on hold since last September, having cut them by a total of 4.5 percentage points to tackle Britain's first economic recession since the early 1990s.

It signaled last month that borrowing costs would not go any lower but it would now resort to pumping money directly into the economy -- so-called quantitative easing -- to boost demand.

The BoE said it had voted to continue with the 75 billion pound program to buy government and corporate debt, and would review the decision each month.

The Committee noted that since its previous meeting a total of just over 26 billion pounds of asset purchases had been made and that it would take a further two months to complete that program, it said in a statement.

There was little market reaction to the decision. However, some economists said the Bank could have provided more details on its quantitative easing program.

British business is concerned that, in the face of a severe recession, quantitative easing has not been sufficiently effective so far. Yields on both gilts and corporate bonds will have to fall much further, before the policy produces a meaningful unblocking of the credit markets, said David Kern, chief economist at British Chambers of Commerce

Quantitative easing must be implemented in a more transparent way. The Bank of England must spell out what rate of expansion in the money supply they are planning to achieve. To alleviate the downturn, it is important to increase monetary growth amongst industrial and commercial companies and individuals.