Bank of England holds interest rate at 0.25pc

LONDON: The Bank of England has voted to keep its main interest rate at a record-low 0.25 percent despite concerns over rising inflation, the BoE said Thursday after a regular meeting.

The Monetary Policy Committee (MPC) voted 8-1 to keep the rate on hold in the last such BoE gathering before Britain triggers the process to exit the European Union.

The bank voted also to leave the level of its cash stimulus programme pumping around the UK economy at 435 billion ($537 billion, 501 billion euros).

"Sterling surged after one member of the MPC voted for a rate hike at the last meeting and the language of the statement appeared more hawkish," said analyst Alex Edwards at trading firm OFX.

"It's come as a positive surprise for the pound, at least in the short term, but it's hardly a huge change in sentiment amongst the committee."

Although UK economic activity has performed better than expected following its June referendum in favour of Brexit, the BoE on Thursday said it "expects a slowdown in aggregate demand over the course of this year, as household demand growth declines in reaction to lower real income growth".

It added: "Official estimates of retail sales have weakened notably, consistent with this expectation, although other indicators of consumer demand such as consumer confidence have been steadier."

Data Wednesday showed that although Britain's unemployment rate has struck the lowest level for more than 41 years, wages growth is slowing against a backdrop of rising inflation.

British 12-month inflation stood at 1.8 percent in January, up from 1.6 percent in December.

Britain meanwhile stands on the cusp of triggering Article 50 of the EU's Lisbon Treaty by the end of March.

This starts a two-year withdrawal process, after which Britain will leave the European Union whether or not it has struck a deal on its future ties with the bloc.

Prime Minister Theresa May has insisted that Britain will leave Europe's single market or tariff-free zone in order to control EU immigration, thus delivering a so-called "hard" Brexit as the country is forced to agree a series of new trade deals globally.