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The Bank of England

LEFTERIS PITARAKIS

The Bank of England left interest rates at 0.5 per cent and kept its asset-buying program on hold on Thursday following signs Britain's economic recovery is not slowing as rapidly as feared.

The BoE's decision contrasts with a move by the U.S. Federal Reserve on Wednesday to buy $600-billion of bonds with new money over the next eight months, after what it called "disappointingly slow" progress towards its economic targets.

The rate decision had been anticipated by all 63 analysts in a Reuters poll. The only analyst who had forecast more QE this month when polled last week revised his call on Wednesday after firmer-than-expected services PMI data.

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Unexpectedly strong U.K. growth data for the third quarter and surveys indicating that manufacturing and service sector activity is still growing may have encouraged BoE policy makers to hold off injecting any further monetary stimulus for now.

But there is a chance the U.K. central bank may eventually decide that more stimulus is needed to shore up the economy against deep government spending cuts, and a significant number of analysts reckon that could come in February.

One Monetary Policy Committee member, Adam Posen, voted in October for a £50-billion pound expansion of the BoE's £200-billion asset purchase program and is likely to have done the same this month, while Andrew Sentance will probably have reiterated his call for higher rates.

Minutes to the Nov. 3-4 meeting published on Nov. 17 will reveal whether either man was able to win broader support on the MPC.

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