BOEThe Bank of England hawks have backed down over their opposition to holding interest rates at record lows, with the MPC voting unanimously to keep the Bank Rate at 0.5 per cent.

For the past six months, MPC committee hawks Ian McCafferty and Martin Weale have voted in favour of a 0.25 percentage point rise in the rate.

The Monetary Policy Committee (MPC) has voted unanimously in favour of holding the Bank Base Rate at 0.5% and chosen to keep asset purchase reserves at £375bn.

The deal struck at the meetings held on 7 and 8 January was “finely balanced” in comparison to the decision reached last month where two members of the MPC voted for an increase in the Bank Rate.

Last month, Ian McCafferty and Martin Weale, voting against the proposition, believed that the sharp fall in inflation to below the 2% target was likely driven by temporary factors, preferring to increase the Bank Rate to 0.75%.

“This marks a significant shift in the expected path for interest rates. Many forecasters had been expecting the first rise to come later this year, but this now looks extremely unlikely.

“This further reinforces my view that they will remain on hold throughout this year and into 2016.”

The MPC said inflation could persist below its target of 2% for longer than previously expected due to the continued decline in oil prices and the drop in inflation globally.

The MPC meeting minutes read: “In the view of all members, the outlook justified maintaining both the current level of Bank Rate and the stock of asset purchases financed by the issuance of central bank reserves.

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