Interest rates unchanged for fourth month

The Bank interest rate will remain at 0.5% - the fourth consecutive month that the rate has remained unchanged at the record low level.

Announcing its decision to keep the rate the same, the Bank of England's Monetary Policy Committee also confirmed that it will continue with its quantitative easing (QE) programme and plans to inject a further £50 billion into the economy over the next three months.

This will take the total amount of money created by the purchase of Government and corporate bonds to £175 billion.

Some economists are asking whether the decision to increase bank spending signals a lack of confidence in the wider economy.

Economist Bronwyn Curtis told Sky News: "The BoE is in danger of damaging its credibility by extending quantitative easing.

"Without a clear economic need for further action, it could arouse suspicion that the Bank's primary objective was the cheap financing of the Government's debt, rather than meeting the inflation target."

However, some business groups continue to argue that the sum may need to be raised further before the end of the year.

David Kern of the British Chambers of Commerce, who have long been calling for further action, said that while the bank's QE "should be sufficient for the time being, in view of the risks still facing the economy, more may be needed later in the year".

"Although QE has helped to prevent a worse downturn, it is not yet fully effective. Money supply is not growing at an adequate pace, bank lending to businesses has recorded outright declines in recent months, and many viable small firms are finding it difficult to access credit."

IMAGE AP Photo/Alastair Grant