Bank of England holds rates, eyes on new forecasts

The Bank of England left its benchmark interest rate unchanged Thursday as expected – while the focus shifted to the Bank's new economic projection report due out next week.

Feeble wage growth and stubborn inflation, which is at risk of sinking below 1 percent, together with negative economic growth data from the euro zone, has prompted the Bank to leave monetary policy as it is.

Read MoreLive blog: ECB, BoE take center stage

Mark Carney
Simon Dawson | Bloomberg | Getty Images
Mark Carney

The U.K. central bank's nine-member Monetary Policy Committee left the bank's main interest rate at a record low of 0.5 percent and the total size of its bond portfolio at £375 billion ($597 billion) after their November policy meeting.

Attention will now shift to the bank's inflation report released next Wednesday, which investors hope will shed further light on the bank's timing of a rate hike.

Read MoreBank of England chief sounds dovish note on rates

"Over the past three months, the market has pushed back its expected timing of the first rate rise from Q1 to Q3 2015," HSBC chief economist Simon Wells said in a note.

"Short-term inflation could be revised down sharply, which will no doubt grab the headlines. But we think the MPC may push up its medium-term inflation forecasts slightly in light of looser monetary conditions, thereby signalling that a long delay in tightening is not a done deal. In this sense we do not expect a resoundingly dovish report," he added.

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The U.K has enjoyed firm economic growth in recent quarters and unemployment has fallen more than expected. The International Monetary Fund (IMF) said the U.K will be the fastest growing major economy in the developed world this year, with growth of 3.2 percent in 2014 – outstripping the rest of the G7 including the United States, Germany and France.

But this economic recovery has not translated into better wages - something the BoE is waiting for before it raises rates. The bank has insisted that a rate hike is contingent on recovery in wage growth—which it does not expect in real terms until the middle of 2015.

In an interview with CNBC last month, Bank of England Governor Mark Carney sounded more dovish on monetary policy than in recent months.

Read MoreBank of England holds fire as wage growth lags

Carney said the BoE would incorporate recent economic developments in policy decisions, which have included a downgrade to the global economy by the International Monetary Fund.

"We have to account clearly for a more modest global recovery, particularly if that is the case in Europe. In addition, we really are concentrating on the labor markets which will be as important as external developments for the path of monetary policy," he told CNBC.

Correction: This article has been amended to reflect that as of Thursday November 6, £375 billion was equivalent to $597 billion.