UK interest rates held at 0.5% after 8-1 Bank vote

The Bank’s Monetary Policy Committee (MPC) voted by 8 to 1 to keep rates unchanged.

One committee member, Ian McCafferty, disagreed with the majority outlook and voted for a quarter-point rate rise for a third month in a row.

UK interest rates have now remained unchanged for more than six years.

The central bank said cost pressures in the UK’s labour market were rising too slowly for inflation to return to the Bank’s 2% target, and that inflation would stay below 1% until spring 2016.

Inflation has been hovering around 0% for the past few months, but the Bank had indicated that robust domestic growth and the fading effect of last year’s big oil price falls would cause it to bounce back towards 2% next year.

Policymakers were fairly relaxed about problems in emerging markets, saying there was little evidence so far that the slowdown in these markets was having much impact on advanced economies.

Many economists still think a UK rate rise will happen early next year, though some are starting to forecast a slightly later move as doubts mount about whether the US Federal Reserve will tighten policy before the end of 2015.

 

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