The Bank of England kept UK interest rates at their record low today as policymakers wait to see whether a fall in inflation is short-lived or turns into a bigger threat for the British economy.
In its last interest rate decision before an election on May 7, the Bank of England left its benchmark borrowing rate at 0.5%.
The rate has been at this level since the height of the global financial crisis in 2009.
Britain saw the fastest growth among major advanced economies last year and is expected to expand by as much as 3% this year, despite a possibly weaker start to 2015. Pay growth is also starting to pick up.
But at the same time, inflation has fallen sharply on the back of the slump in global oil prices.
It touched zero in February, easing pressure on the bank to start weaning the economy off its very low borrowing costs.
All the Bank of England's rate-setters have voted to keep rates on hold since the start of the year because of the inflation slump.
But its chief economist Andy Haldane surprised investors last month by saying a rate cut was just as probable as a rate hike because inflation might not rise as forecast over the coming months.
The Bank of England forecast in February that inflation would touch its 2% target in two years' time.
Haldane's view has been challenged by other Bank of England officials.
Governor Mark Carney and other rate-setters have said they expect the next move on interest rates will be a hike. Economists polled by Reuters this month predicted a first rate in the UK in early 2016.
The signs that the bank remains in no hurry to raise rates helped push down the value of sterling against the dollar to its lowest level in five years last month.
Top officials at the US Federal Reserve said earlier this week that a US rate hike remained a possibility as soon as June, despite some weak economic data recently.
Investors are also waiting to see the outcome of Britain's election which could produce no clear winner, according to opinion polls.
The Bank of England also said today that it was keeping unchanged at £375 billion the stockpile of government bonds that it acquired after the financial crisis as a further way to help support the British economy.
The bank made no statement alongside its rate decision announcement. It is due to release minutes of the April meeting in just under two weeks' time.
