Thursday, the Bank of England maintained its key interest rate at a historical low and decided to continue with its scheme of asset purchases financed by the issuance of central bank reserves. The central bank raised the size of the scheme by GBP 50 billion to a total of GBP 125 billion.

The Monetary Policy Committee of the central bank decided to retain the Bank Rate at 0.5% as expected. The rate now stands at its lowest level since the central bank was established in 1694.

The timing and strength of a recovery is highly uncertain, the central bank said.

In the light of that outlook and in order to keep CPI inflation on track to meet the 2% inflation target over the medium term, the Committee judged that maintaining Bank Rate at 0.5% was appropriate, the BoE said.

The Committee expected that it would take another three months to complete the asset purchase scheme and it will keep the scale of the scheme under review.

The central bank is set to release the minutes of the two-day rate setting meeting on May 20.

Pulled down by food and energy prices, CPI inflation is expected fall below the 2% target later this year, the central bank said. The considerable margin of spare capacity is expected to bear down on inflation thereafter.

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