Interest rate held at 0.5%

The Bank of England Monetary Policy Committee has held the interest rate at 0.5 per cent for the 11th month in a row.

It has also maintained the size of the asset purchase programme at £200 billion following "sluggish growth" in the UK economy in the final quarter of 2009.

The Bank pointed out that Consumer Price Index inflation rose sharply above the two per cent target to 2.9 per cent in December and is likely to have increased again last month as the VAT rate retuned to 17.5 per cent.

"This stock of past purchases, together with the low level of bank rate, would continue to impart a substantial monetary stimulus to the economy for some time to come," it commented.

Mortgage expert Ray Boulger from John Charcol said the decision was unsurprising and suggested that interest rates are likely to remain low for "some time", making tracker mortgages the recommended option for borrowers.