Bank of England decides to leave interest rates steady as inflation remains at historic lows

LONDON – The Bank of England has decided to keep interest rates at a record low of 0.5 per cent, with inflation remaining very low despite the growing economic recovery.

Policymakers also opted Thursday to refrain from pumping more money into the economy. With the inflation rate at zero — and some economists predicting it could even go into negative territory — there was no incentive to act.

Economist Howard Archer from IHS Global Insight says any interest rate hike could be delayed if there is prolonged political uncertainty after the May 7 general election in Britain, because it would dampen economic activity, particularly business investment.

He says it currently looks probable that interest rates will stay steady until 2016.