The Bank of England kept interest rates at 4.5 percent for the seventh month running on Thursday and expectations of a cut in British borrowing costs this year are waning.
All 40 analysts polled by Reuters last week had predicted no change at this month's Monetary Policy Committee meeting but many had said slow economic growth would prompt another rate reduction perhaps as soon as May.
News since then of rising house prices, the services economy expanding at the strongest pace in nearly two years and even industrial output rising three months running has raised doubts about whether the economy really needs a monetary boost.
"The committee's optimism over growth prospects and its wish to see a more balanced economy and to avoid inflating asset prices may well mean that base rates stay where they are for the rest of 2006," said Philip Shaw, chief economist at Investec.
The global economy is on the mend too. Financial markets were largely unsurprised but interest rate futures edged down after the BoE decision as some traders had been positioned for the outside chance of a rate cut.
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