LONDON: The Bank of England held its key interest rate yesterday at a record-low 0.50 percent, in its first meeting since divisions emerged over when to tighten policy.
The central bank’s nine-strong monetary policy committee (MPC) also opted to keep the level of cash stimulus, or quantitative easing, at £375bn ($622bn), it said in a statement.
Investors shrugged off the news however because the decisions were in line with market expectations in view of buoyant British economic growth but also slowing inflation. “The Bank of England has left policy unchanged as widely expected,” added ING economist James Knightley.
For more insight into BoE policymakers’ thinking this month, markets must wait until September 17 for publication of minutes from the meeting.
In August, the MPC was divided for the first time in more than three years, with policymakers Ian McCafferty and Martin Weale calling for a quarter-point rise from 0.50 percent. In the event, the panel voted 7-2 in favour of no action, citing “insufficient evidence” of inflationary pressures.
British borrowing costs have stood at the record-low level since March 2009, when the bank also launched its radical QE asset purchase scheme. In recent months, speculation has grown that the BoE could deliver its first rate increase later this year or in early 2015.
Britain’s 12-month inflation slowed to 1.6 percent in July from 1.9 percent in June, and has held below the bank’s official 2.0-percent target so far this year. The British economy grew by 0.8 percent in the second quarter of this year, matching its output from the previous first three months.
AFP
