The Bank of England held fire on both interest rates and quantitative easing yesterday as it paused to assess the impact of the massive stimulus it has already injected into the economy.

There was little reaction from financial markets which expect no change in monetary policy until much later this year as the central bank waits for a clearer recovery from the worst economic downturn since World War II.

Britain's economy pulled out of recession at the end of last year, but the strength of the upturn remains in doubt at a time when both the government and the banking sector desperately need to get their balance sheets back in shape.

"An unchanged position at this point is the right one given the ongoing uncertainty about the strength of the recovery," said Lee Hopley, chief economist at the Engineering Employers Federation.

"The Monetary Policy Committee continues to face a mixed economic picture with growth at the end of 2009 helped by stimulus measures that have now all but gone."

It is now a year since the bank slashed interest rates to 0.5 per cent and began buying bonds with newly-created money - quantitative easing in the jargon - in an unprecedented attempt to kickstart growth.

The experiment with QE has been regarded as a success by policymakers who say the recession would otherwise have been much deeper.