BoE keeps rates on hold

The BoE's key lending rate has remained at 4 percent - the lowest level for 38 years - since November last year. The bank cut borrowing costs seven times in 2001 in an effort to ease the impact of the global economic slowdown.

But with few signs of a sustained recovery, most economists believe the BoE had little choice but to the leave rates on hold for the time being.

The UK economy, Europe's second largest after Germany, grew by just 0.6 percent in the second quarter after almost grinding to a halt in the fourth quarter of 2001 and the first quarter of this year.

Retail sales edged higher in July for the first time in three months, but at a slower pace than expected.

Seasonally adjusted sales volume rose 0.3 percent last month, bringing the year-on-year growth rate to 4.5 percent. Economists had expected a month-on-month rise of 0.6 percent and an annual increase of 4.7 percent.