LONDON (Reuters) - 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 May 6 general election essentially precluded the Bank of England from changing interest rates or Quantitative Easing given the bank's need to be seen to be politically neutral and independent," said Howard Archer, economist at IHS Global Insight.
"But the Monetary Policy Committee were never going to act anyway. There are very sound economic grounds for the MPC to keep policy on hold and to remain in "wait and see" mode. For a start, the MPC will be keen to see if there are any significant changes to fiscal policy following the general election.
Markets showed no reaction to the widely expected decision. and most analysts don't expect any change in policy until the end of the year, when many are predicting a rate rise.
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.
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.
"Anyone expecting interest rates to rise before the end of the year is barking up the wrong tree. As the economic recovery starts to struggle, I expect a further loosening of the monetary policy," said Roger Bootle, economic advisor to Deloitte.
(Reporting by Sumeet Desai; editing by Mike Peacock, Ron Askew)
