Interest rates kept at record low of 0.5%

The Bank of England kept interest rates at a record low of 0.5% - a decision which was widely expected, despite growing inflationary pressures.

However, the central bank believes price pressures will be short-lived and that the large degree of slack in the economy will help inflation return to target before the year is out.

The Monetary Policy Committee comprising only eight of the usual nine members until a replacement is found for Kate Barker, whose term ended last month also kept its asset-buying target at £200bn, having put it on hold four months ago.