This week, analysts predict that Bank of England (BOE) would hold its monetary stance after the British economy has made a remarkable economic improvement. The BOE will probably hold its monetary stance in February by keeping interest rate at 0.50 percent and amount of asset purchases at 375 billion pounds. Although British growth has eased in the last quarter last year to 0.7 percent from 0.8 percent in the previous three months, the economy still shows vivid signs of recovery. U.K. ILO unemployment for the three months ended November dropped to its lowest in nearly five years, taking a faster step towards the 7% threshold identified by the BOE as guidance to raising interest rate. The BOE decided in August to keep interest rates at record low levels until an unemployment threshold of 7 percent is reached. Inflation reached BOE target for the first time since 2009 as CPI for the year ended December dropped to 2.0% from 2.1% in November. Cost pressures remained "subdued," and inflation expectations remained "well anchored," especially as inflation retreated to target in December, minutes of Jan. 8-9 meeting said. A report due this week may show that services sector expansion widened in January to 59.0 from 58.8, while the manufacturing sector inched down to 57.2 from 57.3. MPC members sees no need to raise interest rate soon as "headwinds for growth would persist for some time," the minutes said. BOE Governor Mark Carney said that when the right time comes, the bank would raise interest rate gradually. Carney has warned the strong sterling is one of the main threats that may weigh on his country's recover trajectory. It seems that policymakers want not to rush in scaling back their quantitative easing methods to avoid any setback in recovery that may stem from emerging economies or the U.K.'s main trading partners, the euro area.
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