Bank of England holds rate at 0.5 per cent

The Bank of England kept its benchmark interest rate at a record low as policy makers judged the need to aid the recovery took precedence over the fastest inflation in more than two years.

The Monetary Policy Committee, led by Governor Mervyn King, set the key rate at 0.5 per cent for a 26th month, as forecast by all 57 economists in a Bloomberg News survey. It also left its bond-purchase program at £200 billion ($327 billion), as predicted by all 32 economists in a separate poll. The pound erased its gain against the dollar.

Policy makers are under increasing pressure to curb inflation that has soared to more than twice the central bank’s 2 per cent target. Economists forecast the European Central Bank will announce its first rate increase since July 2008 today.