Base Rate remains at 0.5% for the second month running

07 May 2009

The MPC held the rate at 0.5 per cent for the second consecutive month after last cutting the rate in March to its current historic low.

The Bank of England says: "The world economy remains in deep recession. Output has continued to contract and international trade has fallen precipitously.

"The global banking and financial system remains fragile despite further significant intervention by the authorities.

"In the United Kingdom, gross domestic product fell sharply in the first quarter of 2009. But surveys at home and abroad show promising signs that the pace of decline has begun to moderate."

The Bank noted that consumer price index inflation is well above its 2 per cent target at the moment at 2.9 per cent but warned it would drop below this later in the year and so the MPC decided that to bring it back to target over the medium term the base rate should remain at 0.5 per cent.