Bank of England steps back from interest rate hike as inflation falls
INTEREST rates are set to stay lower for longer, as senior policymakers at the Bank of England unanimously decided to keep rates on hold, the minutes of this month’s meeting showed yesterday.
Slowing growth in the Eurozone combined with falling inflation in the UK is pushing a prospective rate hike further into the future.
Previously, two members of the monetary policy committee (MPC) had voted for rates to rise by 0.25 percentage points to 0.75 per cent.
This had been seen as a sign the committee would move slowly towards a rate hike, possibly late this year, as the economy recovers and wage growth starts to take off.
But Ian McCafferty and Martin Weale changed their minds this month to join the other seven members in voting for rates to stay at rock bottom.
Although the pair believe the fall in inflation is driven by temporary factors, “they noted the risk that low inflation might persist for longer than the temporary factors implied and concluded that this risk would be increased by an increase in bank rate at the current juncture,” the minutes said.
The pound slid against both the euro and the US dollar on the day, following the news.