Bank of England resists more QE and holds rates

The Bank of England’s Monetary Policy Committee (MPC) has held fire on its quantitative easing (QE) programme and kept interest rates at their historical low of 0.5%.

Its decision to hold rates at 0.5%, where they have remained since March 2009, comes as the CPI measure of inflation registered 4.8% in November 2011 - more than double the Bank's target.

The MPC, which was widely expected to hold interest rates for the 34th consecutive month, maintained its asset purchase programme at £275bn but economists have pencilled in a further round of QE in February amid the ongoing eurozone debt crisis.

Minutes from the MPC's December meeting indicated a further round of QE could be imminent.

The last time the Bank extended its quantitative easing programme was back in October, raising it from £200bn to £275bn.

Its decision not to increase the stimulus measure comes despite a recent warning from the British Chambers of Commerce (BCC) that the UK economy has "significantly weakened" with domestic demand diving to a two-year low.

The BCC said "urgent" action was needed to tackle short-term stagnation and a lack of business confidence due to the eurozone crisis.