Bank of England keeps interest rates at record low

(AP) — The Bank of England left interest rates at a record low of 0.5 percent on Thursday and announced no change in its 200 billion pounds ($320 billion) monetary stimulus program as it looks for clearer signs on the health of the economy.

Analysts had widely expected the Bank's Monetary Policy Committee to remain in "wait-and-see" mode and stand pat at least until next month.

Recent signs that Britain emerged from recession in the fourth quarter have yet to be confirmed by official data, and reports have shown that consumers are continuing to pay off debt rather than borrowing to keep spending.

"With sustainable, significant recovery very far from guaranteed, any policy tightening still looks a long way off and we expect interest rates to stay down at 0.5 percent until at least late 2010," said Howard Archer, economist at IHS Global Insight.

With the strength of economic recovery still in doubt, both in Britain and among its major trading partners, monetary policy is expected to remain loose.

"There are a number of potential pitfalls even as the U.K. economy starts growing again, including cautious consumers, questions over the public finances and a still-fragile banking system," said Lee Hopley, economist at the manufacturers' organization EEF. "The MPC is right to stick until the economic picture becomes clearer."

The November decision to invest another 25 billion pounds in the asset purchase program revealed a split among the nine members, with one member opposing any expansion and another advocating a larger increase.

Last month, the committee was unanimous in voting for no change in the program.

The bank has said it will complete the current asset purchase program, which essentially creates new money in the financial system, by early February.

Economists don't expect any change in the size of the program until then. Interest rates, meanwhile, are expected to remain at the current record low level well into 2010 as Britain makes a slow recovery out of its worst downturn since World War II.