BOE left interest rate unchanged
07 October 2011
The Bank of England voted to expand its purchases of gilts from £200bn to £275bn in an effort to bolster the economy that is already showing signs of stagnation. The Bank said renewed “tensions” in the global economy threatened the UK recovery forcing it to act even with expectations of inflation exceeding 5% in the near future. The BOE left interest rates unchanged at 0.5 per cent. Sterling fell by 1 per cent to $1.53 against the dollar, the lowest level since July 2010, while gilt yields dropped to historical lows. Sterling also fell 0.8 per cent against the euro to €1.14. Ten-year government bond yields fell to 2.18 per cent at one point, close to a quarter percentage point move and near the lowest levels for more than 100 years, according to Bank of England data. Thirty-year gilt yields dropped to 3.23 per cent – the lowest levels since 1989, the furthest back Bloomberg data tracks.