New Delhi, Feb. 7 -- The Bank of England kept its main interest rate unchanged at 3.75% on Thursday with U.K. inflation remaining above target and economic growth is showing signs of picking up.

The decision was widely anticipated in financial markets but the split on the nine-member rate-setting panel was much closer than expected. Five members of the Monetary Policy Committee opted to keep rates unchanged while four voted for a quarter-point cut.

The central bank, which sets interest rates for the whole of the U.K., has been steadily reducing interest rates over the past 18 months, more often than not every three months. It last cut its key rate in December and indicated that further reductions are likely this year.

Economic forecast...