Bank of England Keeps Rates Unchanged
Minutes from the previous meeting showed a three-way split over the direction of monetary policy, with some in favor of raising rates to tame inflation, and others in favor of more stimulus to encourage growth.
Still, recent positive data on manufacturing and services in the U.K. indicate the recovery's momentum was unfettered in the fourth quarter. So while spending cuts to tackle the record budget deficit may curb expansion, so far the data suggest the economy may be strong enough to weather the government's impending cutbacks.
With inflation remaining above the bank's target of 3%, and some at the bank calling for a rate hike to slow price growth, any loosening of policy is a difficult sell.