MercoPress. South Atlantic News Agency

Bank of England ratifies current monetary policy

Britain managed to avoid a double-dip recession in first quarter of 2010

The Bank of England kept on Thursday the interest rate on hold and announced no change to current monetary policy. The cost of borrowing has now stayed at 0.5% for more than a year as the Bank's Monetary Policy Committee attempts to keep a fragile recovery on track.

Rate-setters also opted not to alter the £200 billion it has spent so far on quantitative easing to boost the money supply.

Their decision came hours before respected forecaster the National Institute of Economic and Social Research estimated the UK avoided a double-dip recession in the first three months of 2010 with output growth of 0.4%.

Recovery hopes were also raised this week by predictions from the Organisation for Economic Co-operation and Development that UK growth will outpace many other major international nations at the beginning of this year.

Strong manufacturing and services data have recently added to the positive mood, while the MPC will also have considered the fall in February's rate of inflation to 3%, from 3.5% in January. This has eased pressure on the Bank to raise rates as it looks to steer inflation to its 2% target.

Minutes from its last meeting showed some members were concerned that a weak pound and resurgent economy could keep inflation above target for longer. But others were more concerned that ongoing sluggishness in the UK economy could see inflation sink below the 2% level.

Shortly after the Bank's announcement, the European Central Bank also revealed it was leaving its key interest rate unchanged at 1%.