The U.K.’s central bank decided to keep rates at a record low for the 27th month in a row despite high inflation as the country’s economic recovery appears to be losing momentum, according to The Daily Telegraph. On Thursday, the Bank of England announced that it would keep its benchmark interest rate at a record low level of 0.5%, as a separate report from Markit/Chartered Institute of Purchasing and Supply showed the services purchasing managers’ index dropped to 54.3 in April from 57.1 in March. The data completes a picture of the U.K. economy that suggests gross domestic product may only have rising 0.4% in the first quarter rather than the 0.5% initial official estimate.
The Monetary Policy Committee voted to leave rates unchanged due to signs that the economy is weakening even as the price growth remains high, which is a decision in-line with requests for the British Chamber of Commerce for loose economic policy. The prices sub-index of the services report increased to 53.8, which is the highest level since September 2008. Howard Archer of IHS Global Insight said, “The Bank of England’s decision to keep interest rates down at 0.5% reflects current serious concerns about the state of the economy and its ability to withstand the fiscal squeeze increasingly kicked in from early April.”
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