Bank of England remains interest rate of 0.5%

LONDON, Oct. 8 (Xinhua) -- The Bank of England (BOE), central bank of Britain, announced Thursday that it will remain the interest rate at a record low of 0.5 percent.

So far, the BOE has held the rate for the seventh month. At the same time, the BOE said that it would keep its 175 billion pounds (about 283 billion U.S. dollars) quantitative easing (QE) program in place.

However, economists have predicted that the BOE would likely inject another 20-25 billion pounds (about 32-40 billion U.S. dollars) to boost the economy because the recovery still looks likely to be slow and protracted.

The BOE said that it would decide whether to extend the QE program after it has new economic forecasts next month. In August, the BOE Governor Mervyn King voted to extend the program to 200 billion pounds, which was rejected by the majority of members of the Monetary Policy Committee of the BOE. He said that the recovery would be much slower than expected.

With the economic recovery fragile and the QE still doing little to boost the broad money supply, next month would see the committee increase the amount of the money it is pumping into the economy to some 200 billion pounds or more, said Vicky Redwood, economist of Capital Economics.

Though some parts of the British economy, such as the housing market, have picked up further, the recovery in other areas already appeared to have lost momentum, she said.

According to the latest figures from the Office of the National Statistics, the industrial output in August suffered a decline of 2.5 percent compared with the previous month, the biggest monthly drop since January this year.

Economists forecast that the overall economy would not be less certain to grow in the third quarter of this year.

The Institute of the National Economic and Social Research, a think-tank of Britain, recently said that the output in the third quarter was unchanged as compared to the second quarter of this year. The institute forecast that the British economy would shrink about 4.3 percent in the whole year. (1 U.S. dollar = 0.625 pounds)