Interest rates held at 0.5% again

The Bank of England has kept interest rates at the historic low of 0.5% for the 14th month in succession.

This decision was widely expected, as it is feared that any rise in the cost of borrowing could damage the country's economic recovery. The UK emerged from recession in the final quarter of last year after six consecutive quarters of contraction.

Despite the UK economy growing by 0.2% in the last quarter economists are warning that the recovery is still fragile.

It was also announced that no more money will be pumped into the economy under its quantitative easing (QE) programme for the time being. The Bank recently halted QE after having spent £200bn.

“Risks of adverse market reactions to the inconclusive election result increase the threats to our credit rating. The MPC will not be able to ignore the inflationary consequences if sterling and the gilts market come under serious speculative attacks," said David Kern, chief economist at the British Chambers of Commerce.

“To pre-empt these dangers, it is critical that the political leaders agree a detailed and credible plan for tackling the UK’s unsustainable deficit within the next few weeks. Only such a plan can forestall market pressure for damaging immediate cuts, and will make it easier for the MPC to keep interest rates low for an extended period."