Bank of England Holds Interest Rates Steady, Citing Inflation Concerns LONDON - The Bank of England kept its main interest rate at a record low on Thursday because of concerns about higher energy prices and the continuing economic crisis on the European continent. Britain's central bank left the interest rate unchanged at 0.5 percent. The Bank of England also kept its bond purchasing program at £325 billion, or $517 billion, as expected. Britain's economy has shown some signs of improvement over the last two months, and the pace of consumer price increases has started to slow. But some economists warned that it was far too early to say whether the trends would continue for the rest of the year. A rise in the price of oil and a squeeze on disposable household incomes because of the government's austerity measures continue to be of concern to Bank of England policy makers, especially as bank lending remains tight. "The head winds are still there in higher energy prices and the euro zone crisis, but inflation is better and some global markets are in better shape," said David Tinsley, an economist at BNP Paribas in London. The Bank of England might yet decide to expand its asset purchasing program next month, when the current round of stimulus is expected to end. Two central bank policy makers pushed for more stimulus last month, while the majority preferred to wait to get more clarity on the economic outlook. The European Central Bank left its main interest rate unchanged at 1 percent on Wednesday. Recent signs that the euro zone economy was still struggling outweighed concerns by some economists about the risk of inflation, especially in Germany, Europe's largest economy, and rising energy prices. Unemployment in the 17 countries that use the euro reached its highest level in 15 years during February, according to data published Monday. The British economy shrank 0.3 percent in the fourth quarter of 2011, more than the 0.2 percent previously expected, the Office for National Statistics said last week. But some economists now believe the country will avoid falling back into recession in the first half of this year. The government's austerity program, which includes thousands of public sector job cuts, pay freezes and benefit cuts, continues to weigh on consumer spending, but the manufacturing and construction sectors surprised recently with better-than-expected figures. Manufacturing in March grew at the fastest pace in ten months, and the construction sector reported the fastest growth in 21 months, according to reports by Markit Economics. Gross domestic product probably rose 0.3 percent in the first quarter of this year, the British Chambers of Commerce said Tuesday. Business lobby groups have called on the Treasury to do more to support companies and ease their access to loans.