June 17 (Bloomberg) -- Bank of England policy makers voted unanimously to continue their money-printing program this month and keep the benchmark interest rate at a record low, saying it was too early to know if the measures are working.

``The risk of a continued sharp contraction in output in the near term had receded somewhat,'' minutes of the bank's June 4 decision published today in London said. ``However, there was no reason to conclude that the medium-term outlook for the economy, and thus inflation, had changed materially.''

The nine-member Monetary Policy Committee, led by Governor Mervyn King, said it remained too soon to assess the impact of its plan to buy 125 billion pounds ($206 billion) of government and corporate bonds. The panel also kept the bank rate at 0.5 percent, a three-century low.

Signs are mounting that the U.K.'s economic slump is past its worst, with inflation slowing less than economists forecast in May and manufacturing and services industries showing signs of recovery. The central bank is in its fourth month of money printing in a year where the economy will fail to grow, according to the Confederation of British Industry.

``The committee would continue to monitor carefully the evidence about the effect of its asset purchases on the economy,'' the minutes said.

Global Policy

Central banks worldwide have started to discuss whether to end emergency policies set up to fight the global recession. U.S. Federal Reserve officials are considering whether to use next week's policy statement to suppress any speculation they're prepared to raise interest rates as soon as this year.

Bank of England markets director Paul Fisher said last week that Britain should not be ``complacent'' on the prospects for a recovery, which may falter if banks remain unable to lend enough. Deputy Governor Paul Tucker said it will take until at least the third quarter to gauge whether the financial system is producing enough credit to sustain economic growth.

Still, ``the news over the month had been mostly encouraging,'' the minutes said today. There were signs ``that the second-quarter decline in consumption would be less than the committee had previously anticipated. The housing market showed signs of stabilizing.''

The CBI this week revised up forecasts for gross domestic product, saying it will fall 0.3 percent in the second quarter and 0.1 percent in the third, and will stop shrinking in the final three months of the year. The group previously predicted a contraction throughout the year.

Pound Gain

Policy makers noted the pound's gains against the euro and the dollar, while oil prices have increased.

``The appreciation of sterling in recent months might represent the unwinding of some excess pessimism about the United Kingdom's prospects compared to other major industrialized economies,'' the minutes said. ``The appreciation of sterling would tend to reduce inflationary pressures in the short term, while the increase in oil prices would have the opposite effect.''

U.K. inflation slowed less than economists forecast in May, with the rate slipping to 2.2 percent from 2.3 percent in April, the statistics office said yesterday.

Surveys ``did not suggest that expectations had become de- anchored from the inflation target'' of 2 percent, the minutes said. Still, policy makers will ``continue to communicate how and why the asset purchase program would work, and that it could and would tighten policy once the current exceptional degree of monetary stimulus was no longer warranted.''

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

Last Updated: June 17, 2009 04:30 EDT