BoE leaves interest rates unchanged

The Bank of England kept interest rates at a record low of 0.5 per cent today, judging that the economic recovery remains too weak to sustain an inflationary spiral.

Inflation has already surged to 4 per cent, twice the central bank's target, but the economy faces headwinds from public spending cuts and suffered a surprise contraction at the end of last year.

Some Bank policymakers have indicated that they want to see how the economy performs in the first quarter before changing policy.

All but one of the 63 economists polled by Reuters had predicted a steady verdict. However, most expect the central bank to raise rates before the end of the year and investors are betting on a rise in May.

The European Central Bank, dealing with a much smaller inflation problem, has already signalled that an interest rate rise is imminent.

Interest rates have stood at 0.5 per cent since March 2009 when the Bank slashed rates to an all-time low and embarked on an unprecedented programme of quantitative easing.

Reuters