The Bank of England's Monetary Policy Committee (MPC) voted 8-1 to keep interest rates steady at 3.75 per cent in March.
Minutes of the committee's March 5th and 6th meeting published today showed that a month after the central bank stunned markets by cutting interest rates to a 48-year low, it considered arguments for raising, reducing and keeping rates steady.
The MPC said that the immediate outlook was for growth to be a little below trend and for inflation to be above target. It now expected RPIX inflation to be higher in the short run than forecast in February because of the fall in the pound, higher oil prices and planned council tax increases.
Yesterday, new figures showed RPIX inflation hit 3.0 per cent in March, the highest level in nearly five years.
The world outlook, however, was relatively unchanged and the MPC still forecast a "slow recovery". The MPC said that the threat of war with Iraq raised short-term uncertainty and was hitting confidence but that it was still not clear what effect it would have on global activity.
PA