BofE keeps rates & QE unchanged at 0.5pc and £175bn respectively

The Monetary Policy Committee of the Bank of England voted for retaining interest rate at its record low of 0.5 per cent and advised to maintain its quantitative easing spending at £175 billion to boost the money supply.

Quantitative easing program is expected to take another two months for completion.

Though there are apparent signs of economic revival, yet the Bank of England wants to remain cautious as any rise in interest rate might kill hopes of recovery.

It may be noted here that earlier bank's Governor Mervyn King had supported to extend QE to £200 billion but was outvoted by his colleagues.

The lender was also advised by the monetary policy committee to penalize high street banks by imposing a negative interest on the cash held by these banks in its reserve accounts.

According to several economists cash held by high street lenders in the Bank of England is socially useless.

Speaking on the topic, economist David Kern said, "This might discourage hoarding of cash and encourage the banks to lend more."

The pound jumped to $1.6677 and also became stronger a little against the Euro.