Bank of England keeps key British interest rate steady at 4.0 percent

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The Independent Online

The Bank of England left its key interest rate steady at 4.0 percent, the bank has announced.

The decision by the central bank's monetary policy committee had been expected.

Fears that a Christmas shopping boom and strong car sales in December might help kindle inflation appeared to offset the bank's long–standing concern about a continued slump in business for manufacturers, which have lobbied for further interest rate cuts.

Some business leaders had even expressed worries that the bank might increase the interest rate.

The base rate is one of the bank's most important tools for fighting inflation. A lower rate encourages borrowing and consumer spending, while a higher rate tends to serve as a brake on business and an overheated economy.

The bank last cut its base lending rate in November, from 4.5 percent. It cut the base rate by a total of 2 percentage points last year, from 6 percent to 4 percent.

The bank made no comment on its reasons for leaving the rate unchanged.

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