Bank of England holds rates steady

LONDON — The Bank of England kept its base interest rate at the all-time low of 0.5 percent last week and did not approve any additional monetary stimulus, despite Britain’s fall back into recession, likely because of concerns over inflation.

With the U.K. economy officially in recession after two quarters of shrinking gross domestic product, analysts had thought there was a chance that the bank’s Monetary Policy Committee might approve new stimulus this month. Most, however, believed that worries about growth would be outweighed by concern over persistently above-target consumer price inflation, currently at 3.5 percent.

“The MPC’S inaction suggests that for now at least, the committee maintains the overall view that the economy is achieving underlying growth despite apparently being back in recession,” said Howard Archer, European economist at IHS Global Insight.

“It also suggests that there is significant concern within the MPC that consumer price inflation will not fall back as far or as quickly as had previously been hoped,” Archer said.

With Thursday’s decision, the stimulus program — by which the Bank of England buys asset such as government bonds from banks to create new money in the economy — remains at a total of $524 billion.

The duration and depth of Britain’s recession and trends in inflation data will be key to the Bank of England’s policy decisions in coming months.

Also Thursday, the Office for National Statistics reported more downbeat figures showing industrial production fell by 0.3 percent in March compared with February.