The Bank of England is to freeze its radical policy of pumping new money into the economy, it announced on Thursday, after holding its key lending rate at a record low 0.50 per cent.
The widely-expected news, which came before a separate interest rate call by the European Central Bank, followed recent data showing the British economy narrowly emerged from recession in the fourth quarter of 2009.
The bank has so far injected STG200 billion ($A360.1 billion) into the economy under quantitative easing (QE), whereby it creates money by purchasing bonds from commercial institutions.
"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.50 per cent," the central bank said in a statement after a two-day policy meeting.
"The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at STG200 billion ($A360.13 billion)."
The radical QE policy was launched in March 2009 -- when the BoE also slashed interest rates to the current record low -- in a bid to get banks lending again and help drag Britain out of a deep recession.
However, official data showed last week that the economy grew by 0.1 per cent in the final three months of last year, ending the country's worst recession in modern history.
The weak growth rate dashed market expectations of 0.4-per cent expansion, sparking speculation that the central bank might decide to increase QE to aid the recovery.
AFP
