Bank of England holds course on rates

London - The Bank of England left monetary policy unchanged on Thursday, sticking to its plan to keep interest rates at a record low until the country's surprisingly fast economic recovery broadened out.

Britain moved from a laggard to a leader in terms of growth among the world's biggest economies last year.

Unemployment

Its economy is expanding by more than 3% in annualised terms although there are concerns the recovery could prove unsustainable, especially as wage growth remains weak.

The BoE said in August it would not think about raising rates until unemployment falls to 7%. Since then unemployment has come down much faster than the Bank expected, raising questions about how long it can hold off on raising rates.

But inflation has also fallen to within a whisker of its 2% target, reducing the pressure on the BoE.

At its two-day meeting which ended on Thursday, the Bank's monetary policy committee kept interest rates at 0.5%, as expected by all the economists who took part in a poll.

Investors

It also left its bond-buying programme unchanged at £375bn.

The turnaround in Britain's economy contrasts with the situation in the eurozone, its main trading partner, where the European Central Bank is expected to use a news conference later to remind investors it could ease policy further.

The pace of Britain's recovery has helped the pound to strengthen by 5% against the euro and 10% against the dollar since the middle of last year.