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Bank of England leaves rates unchanged

Staff writer |
UK interest rates have been held at a record low of 0.5% for another month by the Bank of England. It also decided to maintain its quantitative easing program at the 375bn pounds already spent.

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The Bank's Monetary Policy Committee has held rates at 0.5% since March 2009 to try to help economic recovery.

The Bank warned last month that the inflation rate could fall to as low as 1% in the coming six months, well below its 2% target rate. One factor in keeping inflation low has been the 25% fall in the oil price since the summer, which has cut fuel prices at the pump for motorists.

Fierce competition between supermarket chains has also meant cheaper food for consumers.

Economic surveys released earlier this week suggested that economic growth was holding up, with the dominant services sector strengthening in November.

The purchasing managers' surveys from Markit indicated economic growth of 0.6% in the final three months of this year, the research firm said, slightly lower than the 0.7% rate recorded in the third quarter.

The chancellor said in the Autumn Statement on Wednesday that the UK economy would grow by 3% this year, up from a previous forecast of 2.7%, with growth of 2.4% next year.

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