The Bank of England held its key lending rate at a record low 0.5 percent today and said it would maintain its emergency stimulus measures, as Britain's economy signals recovery.
"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 following its latest monthly policy meeting.
"The Committee also voted to continue with its programme of asset purchases totalling 175 billion pounds financed by the issuance of central bank reserves."
After last month's shock decision to pump an extra 50 billion pounds (57 billion euros, 82 billion dollars) of new money into the economy to encourage bank lending, the BoE has decided to sit tight in September, as expected.
The latest meeting comes amid a pick-up for Britain's economy, highlighted on Thursday by London's stock market reaching its highest level for 11 months, above 5,000 points, and data showing home prices recovering further.
"More signs of recovery have appeared in the UK economy," Philip Shaw, an economist at Investec banking group said following the BoE's latest announcements.
"Overall, it looks very much as though third-quarter GDP will post its first quarterly increase since" the start of 2008, he said.
Markets will have to wait until October for this to be officially confirmed.
Despite signs that Britain may soon follow France, Germany and Japan out of recession, Governor Mervyn King's actions at the BoE's meeting in August suggested that he was less positive than the market regarding the nation's recovery prospects.
At the August meeting, King had wanted the BoE to pump more new money into the economy than the amount eventually agreed upon by his colleagues.
King and two other BoE policymakers had wanted the central bank to increase its so-called quantitative easing (QE) programme by 75 billion pounds.
However, their plan was thwarted as the six other policymakers voted instead to increase QE by 50 billion pounds to a total of 175 billion pounds.
The BoE on Thursday said it would take another two months to complete its current QE asset purchase programme which effectively creates money by buying bonds from commercial institutions.
"The scale of the programme will be kept under review," it added in its statement. The central bank said it would publish minutes of its latest two-day meeting on September 23.
The BoE launched the QE policy in March, when it also slashed borrowing costs to their current historic low level as policymakers sought to prevent the British economy sliding further into a painful recession.
The BoE has since ramped up its QE scheme to encourage commercial banks to lend to businesses and individuals, such as those seeking mortgages.
British banks remain reluctant to lend because they want to build up their capital reserves, which have been savaged by the soaring bad debts caused by the global financial crisis.
Official data showed gross domestic product (GDP) in Britain contracted 0.7 percent in the second quarter compared with the first three months of the year, with the number of unemployed rising towards three million.
The BoE's main task is to use monetary policy to try and keep annual inflation close to a government-set target of 2.0 percent.
The BoE recently forecast that the rate of 12-month inflation was set to fall under 1.0 percent this year as the economy makes a slow recovery.