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Bank of England holds interest rates

Source: Reuters - Thu 15th Apr 2010

The Bank of England kept interest rates at a record low of 0.5 percent for the 13th month running on Thursday and made no increase to its 200 billion pounds asset-buying scheme to boost the economy.

Not one of the 64 analysts had expected the central bank to make any changes this month given the economic outlook remains unclear and will likely be so at least until after a national election on May 6.

The BoE cut rates to their record low and started buying assets with new money in March 2009 when the economy was still reeling from a global credit crunch.

Conditions have improved since and the BoE paused its "quantitative easing" in February, keeping open the option to revive it if the economy conditions deteriorated.

Most analysts expect no expansion will be needed and that interest rates will start rising at the back end of the year.

Data out earlier on Thursday showed British industrial output rose twice as fast as expected in February, jumping by 1 percent after the snow-related disruption of the month before.

And house prices shot up by 1.1 percent in March, according to the Halifax index, in a sign that February's decline may have been a blip.

But the economy is not out of the woods yet. A budget deficit running at around 12 percent of GDP means that a big squeeze on government spending lies ahead whoever wins next month's election.

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