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| - The Bank of England left record low interest rates unchanged Thursday as it weighed Britain's vaccine-driven pandemic recovery alongside stubborn fears of rising inflation. The BoE's Monetary Policy Committee (MPC) voted unanimously to keep its key rate at 0.1 percent, where it was slashed to one year ago when the coronavirus crisis first erupted. Policymakers also left their vast quantitative easing stimulus at £895 billion ($1.2 trillion, 1.0 trillion euros), as the economic outlook is boosted by lockdown-easing plans. Prime Minister Boris Johnson's latest phased plan to end England's current Covid-19 lockdown would deliver a "slightly stronger" rise in consumer spending than previously anticipated, the bank said in a statement. The BoE, whose chief task is to keep 12-month inflation close to a 2.0-percent target, cautioned however that it would approach this level in the in coming months due to recent energy price hikes. The warning comes amid growing fears over spiking inflation as a result of Britain's economic bounceback and pent-up demand from consumers. "The MPC will continue to monitor the situation closely. If the outlook for inflation weakens, the committee stands ready to take whatever additional action is necessary to achieve its remit," it said. "The committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2.0-percent inflation target sustainably." However, the central bank painted a brighter picture of the economy, adding that second-quarter economic growth was set to be stronger than previously expected in February. The near-term outlook was brighter due to Britain's rapid and successful vaccination programme, alongside the impact of the US government's vast $1.9-trillion stimulus package, it added. Britain has now given more than 25 million people a first dose of a Covid-19 vaccine as it targets a phased exit from current lockdown restrictions and a return to normality. Yet the BoE also cautioned over the long term outlook as a result of the pandemic, which has so far killed more than 125,000 people in Britain -- one of the world's worst outbreaks. Coronavirus sparked a 10-percent collapse in the UK economy last year -- the biggest slump in more than three centuries -- as Brexit also weighed. "The outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remained unusually uncertain," the BoE said. "It continued to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets responded to these developments." However, the bank also warned that recent UK budget measures -- including a hike in taxation on business profits -- could slow recovery. BoE Governor Andrew Bailey had forecast earlier this week that the UK economy would return to its pre-pandemic level towards the end of 2021. Pantheon Macro economist Samuel Tombs noted that the BoE was also bolstered by positive news both at home and abroad. "The Committee appears to have become more upbeat on the near-term path for GDP, as the government's timetable for reopening the economy is swifter than it had anticipated in February... and fiscal support in the UK and the US has exceeded its expectations," Tombs noted. js-rfj/bmm
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