Thursday, May 05, 2011
Making Bank rate history
Posted by David Smith at 09:00 PM
Category: Thoughts and responses

The May decision to keep Bank rate at 0.5% and the amount of quantitative easing at 200 billion was, in the end, no surprise. Much stronger GDP data and a much higher April inflation reading would have been needed to provoke a rise.

With Bank rate on hold for the 26th month, and at a record low, the Bank is making history. You have to go back to the period October 1939 to November 1951 for a longer period of unchanged rates. Half of that was in wartime but the whole of Clement Attlee's peacetime premiership occurred under unchanged Bank rate. It must have been quite a moment in November 1951, when the rate was eventually raised, from 2% to 2.5%.