The Bank of England holds rates at record low

The Bank of England has today announced its base rate will remain at the record low of 0.5% for the sixth month running.

It also reported that it would continue to inject up to £175 billion into the economy as part of its quantitative easing scheme, but this amount will not be extended further.

This follows a number of recent surveys that suggest the UK has begun to emerge from the recession.

But the Bank said the recovery would be "slow and protracted" and that it is likely to be months before the full impact of its policies is seen.

The recent optimism about the future of the UK economy has had a positive affect on the FTSE 100 index, pushing it above 5,000 points for the first time since October last year.

Data published this week has shown that July saw manufacturing output in the UK increase at its fastest rate in 18 months.

Reputable researchers at the National Institute of Economic and Social Research also said the UK economy grew 0.2% in the three months to August.

But it added that although this was good news, the trend in growth should not be confused with a "return to normal economic conditions".

"There may well be a period of stagnation now, with output rising in some months and falling in others."

The cuts made to the interest rates have been made as part of a strategy to attempt to boost lending in the economy.

But some economists have now called for further rate cuts to below 0% in order to dissuade banks from keeping the money that is being injected into the economy, encouraging them to lend it to consumers and businesses in the form of mortgages and loans.

"One must now question the conventional view that cutting rates below 0.5% will not help," said BCC chief economist David Kern.