Mervyn King announces last MPC decision on rates

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Outgoing Bank of England governor Sir Mervyn King called time after 16 years of rate-setting yesterday as policymakers held fire on more money printing amid growing economic optimism.

In the last rates decision chaired by King before he hands over the reins at the end of the month, the Bank kept its quantitative easing (QE) programme steady at £375 billion and held interest rates at 0.5 per cent.

Upbeat surveys from construction, manufacturing and services sectors this week gave the UK’s growth prospects a boost, allowing King to hand over to incoming governor Mark Carney with the recovery on track.

The Bank’s monetary policy committee was widely expected to pause on more economic stimulus this month after the UK economy grew by 0.3 per cent in the first quarter, avoiding a much-feared triple-dip recession. Economists said the UK is now “firing on all cylinders” after the trio of economic surveys this week showed growth picked up markedly in May.

Government housebuilding stimulus schemes have been credited with lifting the construction sector out of the doldrums, with higher sales of new homes and house prices prompting firms to hire more staff.

Industry figures yesterday showed the government’s Help to Buy housing scheme has got off to a “flying start”, with 4,000 homes reserved for purchase in just two months.

House prices also recorded their strongest annual increase for more than two years in May, mortgage lender Halifax reported yesterday.