The European Central Bank kept its key interest rate steady on Thursday but the Bank of England reduced rates for the second straight month, citing inflation pressure in line with analyst expectations.

The Governing Council of the ECB kept its minimum bid rate on the main refinancing operations unchanged at 4.00 percent. The Bank of England's Monetary Policy Committee voted to reduce the official Bank Rate paid on commercial bank reserves by 0.25 percentage points to 5.25 percent.

The prospects for output growth abroad have deteriorated and the disruption to global financial markets has continued, the BoE said in a statement. The bank said UK credit for household and businesses was tightening as consumer spending slowed.

These developments pose downside risks to the outlook for inflation, it said.

It added that inflation should begin to lessen later this year. Prices grew by 2.1 percent in December, according to the UK's consumer price index. The rate was slightly above the bank's target of 2 percent. It expected sharp increases in energy and food prices in the coming months.

The rate cut was necessary to meet the inflation target rate in the medium term, it said.