Data showing British construction output edged up less than expected in October did little to move the pound.
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“The meeting minutes also showed an unchanged 8:1 vote distribution, with one sole vote in favour of a rate hike, the same outcome as that since August”.
The UK central bank said in a statement that its nine-member Monetary Policy Committee voted eight to one to maintain the central bank’s main interest rate at 0.5 per cent, where it has been since early 2009.
The Bank of England ended another year leaving interest rates at record lows yesterday, as the City was jolted by poor United Kingdom trade figures. Ian McCafferty preferred to increase Bank Rate by 25 basis points, given his view that the path of domestic costs was more likely to lead to inflation exceeding the target in the medium term than was embodied in the Committee’s collective November projections.
“With the inflation outlook remaining benign for the foreseeable future and coupled with weaker worldwide growth, the Bank of England is right to keep interest rates on hold”. “The price of oil had fallen markedly again, increasing the likelihood that headline inflation rates would remain subdued, and nominal wage growth had levelled off”, said the minutes.
He commented: “With inflation still slightly negative and uncertainties about global economic prospects continuing to be a feature of economic debate, the MPC was unlikely to change the decision taken last month”.
“Furthermore, the BoE clearly seems to have no appetite to indicate a policy before the US Federal Reserve’s decisive meeting next week”. Carney has previously sent messages that a rate hike might be on the way, only to be knocked off course by surprises such as the plunge in oil prices and this year’s surge in concern about a slowdown in China and other emerging markets FOLLOW THE FED?
Economists polled by Reuters have mostly said they expect the Bank to start to raise rates in the second quarter of 2016.
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The BoE said on Thursday that a softening of spending cuts planned by finance minister Osborne could add 0.2 percentage points to growth next year.
