While halting QE, the Bank said the £200bn already injected into the economy through the programme would "continue to impart a substantial monetary stimulus to the economy for some time to come".
Economist Allan Monks of JP Morgan said there remained a "25% chance" the Bank's rate-setting Monetary Policy Committee (MPC) could opt for more QE.
But it did not close the door on further spending.
He said that while he expects the Bank to pause QE, it may "keep the option of further extension of QE, if needed, on the table".
"[The Bank] will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them."
Inflation concern
Weak growth
The expected decision to keep rates on hold at 0.5% comes despite official figures showing in January that UK consumer prices rose in December by 2.9%, their fastest annual pace for nine months and above the 2% target.
Analysts had expected rates to remain unchanged.
The decision to keep rates on hold comes despite official figures showing that UK consumer prices rose in December by 2.9%, their fastest annual pace for nine months and above the Bank's 2% target.
The Bank said in a statement that it would "continue to monitor the appropriate scale of the asset purchase programme" and further purchases would be made if needed.
Bank Governor Mervyn King warned last month inflation was "likely to rise to over 3% for a while", and could go even higher if energy prices and indirect taxes were to increase further, but added that it "should return to target in the medium term".
Bank Governor Mervyn King warned last month inflation was "likely to rise to over 3% for a while", and could go even higher if energy prices and indirect taxes were to increase further, but added that it "should return to target in the medium term".
Quantitative Easing
First, with the permission of the Treasury, the Bank of England creates lots of money. It does this by just crediting its own bank account. It plans to have created £200bn in this way by early 2010.
The Bank of England then spends the cash, mainly on buying government bonds from other banks, although it has also spent some of it on buying bonds issued by big companies.
The idea is that the banks will take that money and lend it to companies and individuals. They in turn will spend the money on things like expanding their businesses or buying new homes, which boost the economy.
Theoretically, when the economy has recovered, the Bank of England sells the bonds it has bought back to the banks and destroys the cash it receives. That means in the long term there has been no extra cash created.
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Although the UK did officially come out of recession in the fourth quarter of 2009 - ending six consecutive quarters of economic decline - the growth was just 0.1%, much less than expected.
Although the UK did officially come out of recession in the fourth quarter of 2009 - ending six consecutive quarters of economic decline - the growth was just 0.1%, much less than expected.
For that reason, most analysts expect rates to stay at 0.5% until at least the second half of 2010 for fear of the UK falling back into recession.
For that reason, most analysts expect rates to stay at 0.5% until at least the second half of 2010 for fear of the UK falling back into recession.
"At present, we do not expect, or think it necessary, to increase QE above £200bn," said David Kern, chief economist at the British Chambers of Commerce.
with the permission of the Treasury, the Bank of England creates lots of money. It does this by just crediting its own bank account. It plans to have created £200bn in this way by early 2010.
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The
Bank of England then spends the cash, mainly on buying government bonds from other banks, although it has also spent some of it on buying bonds issued by big companies.
class="dslideshow-entry">
The
idea is that the banks will take that money and lend it to companies and individuals. They in turn will spend the money on things like expanding their businesses or buying new homes, which boost the economy.
class="dslideshow-entry">
Theoretically,
when the economy has recovered, the Bank of England sells the bonds it has bought back to the banks and destroys the cash it receives. That means in the long term there has been no extra cash created.
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"But it is very important for the MPC to persevere with expansionary policies. The main priority must be to avoid a double-dip recession."
