The unemployment rate in the period between January and March unexpectedly fell to its lowest level in nearly 42 years at 4.6 percent. Economists polled by Reuters had expected the rate to remain at 4.7 percent.

And the number of people in work rose by a strong 122,000, taking the employment rate to a new record of 74.8 percent, the Office for National Statistics said.

The BOE is watching closely for signs of a pick-up in wages that could add to inflation which seems to be heading for around 3 percent due to the fall in the value of the pound since the Brexit referendum and as oil prices rise.

So far the central bank believes there is little pressure on most employers to raise pay sharply which could feed a more permanent inflation problem.

Instead, the Bank has softened its previous forecasts for a rise in unemployment which it expects to stand at 4.7 percent this year, still above the level which it considers inflationary.

A survey published earlier on Wednesday showed inflation gnawed further into the budgets of British households this month, resulting in the sharpest fall in cash available to spend in two-and-a-half years.

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