The Bank of England's Monetary Policy Committee has kept the country’s interest rate low at 0.5% again. The rates are likely to be low for this year despite the high inflation rate which is currently at 4%. The bank has also left its bond-purchase program at 200 billion pounds.

Bank of England’s Governor, Mervyn King has warned that inflation rate of the country could rise to as much as 5% in the short-term because of higher commodity prices. He believes that high inflation rate will make the economic problems caused by high levels of debt worse. Most of the companies have reported a decline in their sales.

The economy of the nation is growing gradually and is weaker at present because of high levels of debt. This week’s data of the country shows a slowdown in growth in manufacturing, construction and service. The growth was even lesser than the expectations of economists.

The government of England has implemented spending cuts and tax increases last month as a part of its plan to reduce most of the budget deficit by 2015. The deficit was as high as 11% of gross domestic product last year.