Bank of England votes 8 to 1 again to keep interest rates at historic low of 0.5%

5th November 2015


The Bank of England’s Monetary Policy Committee (MPC) has voted 8 to 1 yet again to keep interest rates at their record low of 0.5% for another month.

It however voted unanimously to maintain its bond buying, quantitative easing programme at £375bn.

MPC member Ian McCafferty was again the dissenter, voting for a 25 basis points hike to 0.75%.

The cost of borrowing in the UK has now been at its historic low of 0.5%, for six and half years after the Bank slashed the cost of borrowing during the financial crisis in a bid to prop up the UK economy.

What has now been labeled Super Thursday, the Bank has also published its quarterly inflation report and the minutes from its previous policy meeting alongside its decision on interest rates.

In its inflation report, the Bank of England was considerably more dovish, noting that “the outlook for global growth has weakened since August”.

It said: “Many emerging market economies have slowed markedly and the Committee has downgraded its assessment of their medium-term growth prospects.

“While growth in advanced economies has continued and broadened, the Committee nonetheless expects the overall pace of UK-weighted global growth to be more modest than had been expected in August.  There remain downside risks to this outlook, including that of a more abrupt slowdown in emerging economies.”

Howard Archer, chief UK and European economist at IHS Insight believes that the first interest rate hike from 0.50% to 0.75% is still most likely to happen in May 2016.

He added: “The risks now seem to be that the increase could be later than this rather than before it. As things currently stand, an interest rate hike in the first quarter of 2016 looks unlikely.”

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