The Bank of England's Monetary Policy Committee (MPC) has held fire on its quantitative easing (QE) programme and kept interest rates at their historical low of 0.5%.
Its decision to hold rates at 0.5%, where they have remained since March 2009, comes as the CPI measure of inflation registered 4.8% in November 2011 - more than double the Bank's target.
The MPC, which was widely expected to hold interest rates for the 34th consecutive month, maintained its asset purchase programme at £275bn but economists have pencilled in a further round of QE in February amid the ongoing Eurozone debt crisis.
Minutes from the MPC's December meeting indicated a further round of QE could be imminent.
The last time the Bank extended its quantitative easing programme was back in October, raising it from £200bn to £275bn.
Its decision not to increase the stimulus measure comes despite a recent warning from the British Chambers of Commerce (BCC) that the UK economy has "significantly weakened" with domestic demand diving to a two-year low.
The BCC said "urgent" action was needed to tackle short-term stagnation and a lack of business confidence due to the eurozone crisis.
Chief economist at gold broker Gold Made Simple Thomas Paterson said near zero-interest rates are here to stay.
"Get used to hearing the phrase ‘no change' this year because that's what the Bank will be saying each and every month during 2012 - and probably much of 2013," he said. "The Bank of England and UK government have boxed themselves into a corner where even a small hike in rates would devastate both the country's banks and its finances.
"Interest rates will be held at near zero, even in the face of above target inflation, for a lot longer than people think."
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