BoE policymakers united in rate call

Bank of England policymakers voted unanimously to keep British interest rates at a record low and maintain credit-easing plans, minutes of their meeting showed yesterday.

The central bank's Monetary Policy Committee voted 9-0 in favour of keeping the status quo at their last meeting held on January 6-7.

The MPC decided to leave the bank's key interest rate at 0.50 per cent and maintain its so-called quantitative easing plans that seeks to boost lending by commercial banks.

The BoE's key task is to keep annual British inflation close to a government-set target of two per cent.

Official data showed Tuesday that annual inflation in recession-hit Britain surged to 2.9 per cent last month, owing to taxation changes and other exceptional factors which had boosted the December 2008 figure.

However, the MPC minutes showed yesterday that the bank expected inflation to fall below target in the coming months.

"Committee members continued to expect inflation to fall below the target for a period once the various near-term price-level shocks to inflation had worked through," the minutes read.

"Committee members agreed that recent developments did not provide grounds for substantially changing their views about the medium-term prospects for activity."

Earlier this month, the BoE said it would continue to pump out up to £200 billion of new money under its quantitative easing project that is also aimed at helping to lift Britain out of recession.

Britain is the last major world economy officially in recession but data due next week is widely expected to show that the nation returned to growth in the fourth quarter of 2009, or three months to December.