The Bank of England’s monetary policy committee voted unanimously in favour of holding the Bank rate in its latest meeting, despite two members viewing the decision as “finely balanced”.
The committee voted in March to hold the Bank’s base rate at 0.5 per cent, despite recent comments from Bank of England governor Mark Carney suggesting rates could move upwards.
Presenting the Inflation Report in February, Carney said: “It’s pretty clear in terms of our central expectation that the most likely next move in monetary policy is an increase in interest rates.”
However, minutes from the latest MPC meeting show all members voted in favour of maintaining rates at 50 basis points, despite the committee noting that it had been surprised by indicators of good news from overseas.
“Indicators in the euro area suggested a pace of growth perhaps fractionally above that envisaged at the time of the February Report,” the committee said, adding that while labour costs appear to be growing ahead of forecasts, sustained improvements would be necessary to return inflation nearer its 2 per cent target.
The MPC also noted stronger prospects for UK growth compared with its EU counterparts could put upward pressure on Sterling exchange rates, further dampening prospects of rising inflation.
“In light of the relatively limited amount of news for the inflation outlook over the month, all committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting, although two members regarded this month’s decision as finely balanced,” the MPC said.
“There was a range of views over the most likely path of Bank rate in future, but all members agreed that it was more likely than not that Bank Rate would increase over the next three years.”