LONDON - Sterling slipped versus the dollar and euro on Thursday after the Bank of England kept the size of its stimulus programme unchanged and left its benchmark interest rate at an all-time low of 0.1%, as expected.

Sterling fell 0.4% against the dollar to $1.3907. It slipped 0.5% versus the euro to 85.90 pence, a day after hitting its highest level versus the single currency since early April.

The BoE said its Monetary Policy Committee voted 8-1 to keep its government bond-buying programme at 875 billion pounds ($1.2 trillion). The MPC voted 9-0 to keep Bank Rate unchanged and to leave its 20 billion pound stock of corporate bond purchases unchanged.

Britain's two-year gilt yield dipped 1 basis point to 0.076%, a session low, after the decision.

Economists had expected no policy changes by the BoE as it waits to see if a post-lockdown jump in inflation proves transitory and whether unemployment rises when the government scales back its job-protection scheme.

"There is absolutely no sign in the minutes or statement that the MPC is considering an early end to QE," said Stephen Gallo, European Head of FX Strategy at BMO Capital Markets.

"The response in the GBP to this MPC is entirely appropriate, though it’s clear from the discussions that the broader MPC is taking the rise in inflation pressures more seriously."

Sterling investors have been focused on signs of any concern over about a recent increase in UK inflation, which broke above the central bank's 2% target and looks set to climb higher as the country reawakens its economy from its coronavirus slumber.

(Reporting by Tom Wilson Editing by Peter Graff and Chizu Nomiyama) ((T.Wilson@thomsonreuters.com; (44) 20 7513 5676; Reuters Messaging: t.wilson.thomsonreuters.com@reuters.net))