The Bank of England left its key interest rate at a record low 0.50 percent and maintained radical credit-easing plans today as Britain awaits data set to signal the end of a deep recession.
Following a two-day meeting the central bank's nine-member Monetary Policy Committee (MPC) agreed to freeze borrowing costs at 0.50 percent, where they have stood since March, 2009.
The BoE also announced it would continue to pump out up to 200 billion pounds (222 billion euros, 320 billion dollars) of new money under its Quantitative Easing project that seeks to boost lending by commercial banks.
Britain is the last major economy officially in recession but data due later this month is expected to show that the nation returned to growth in the fourth quarter of last year.
"Bank of England inaction on both Quantitative Easing and interest rates was pretty much a nailed-on certainty," at its first meeting of 2010, IHS Global Insight's chief UK economist Howard Archer said on Thursday.
"The MPC were always likely to remain in 'wait-and-see' mode given that November's 25 billion-pound extension in Quantitative Easing will last through to early February."
Archer added that Thursday's decisions were also expected given that the British economy "seemingly returned to growth in the fourth quarter of 2009, latest economic data... have been more upbeat overall and tentative signs are emerging that money supply growth and bank lending could be picking up".
In a bid to lift Britain out of recession, the BoE decided last March to slash borrowing costs to their current record low level.
At the same time, the central bank launched its Quantitative Easing (QE) programme, whereby it creates money by purchasing bonds from commercial institutions. The programme is due to finish next month.
"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 percent," the BoE said in a statement on Thursday.
"The Committee also voted to continue with its programme of asset purchases totalling 200 billion pounds financed by the issuance of central bank reserves."
Markets will have to wait until January 20, when minutes of the central bank's latest meeting are published, for reasons behind the announcements.
The BoE's main task is to use monetary policy to keep annual inflation close to a government-set target of 2.0 percent.
Twelve-month inflation jumped to 1.9 percent in November owing to rising fuel prices, recent official data showed. It is expected to rise further in the coming months, before falling back to about 1.0 percent in late 2010, according to the BoE.
British gross domestic product (GDP) meanwhile contracted 0.2 percent during July-September compared with the previous three-month period, recent official data showed.
Britain begins 2010 as the only top economy in recession after the eurozone, France, Germany, Japan and the United States last year each emerged from the deep downturn that was sparked by the global financial crisis.
The British economy, which is struggling with high unemployment and massive public debt caused by the financial crisis, has contracted for six quarters in a row -- its longest recession since official records began in 1955.
Finance minister Alistair Darling recently admitted that Britain's recession would be deeper than thought -- with the economy predicted to have shrunk by 4.75 percent in 2009 compared to a previous estimate of 3.5 percent.
The economy is expected to grow 1.0-1.5 percent in 2010, according to Darling.
Management of the British economy is the key issue in a general election due no later that June, with the opposition Conservatives widely expected to oust the incumbent Labour government.