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No new votes for rate hike at Bank of England

No new votes for rate hike at Bank of England

A majority of the Bank of England's rate-setting Monetary Policy Committee held firm in March on holding its key rate at an all-time low of 0.5 percent despite mounting inflation concerns, according to minutes of the meeting released Wednesday.
Although inflation jumped to 4.4 percent in February, no new MPC members voted for a rate hike. The majority felt the outlook was uncertain and that "the balance between the upside and downside risks to the medium-term inflation outlook had probably not shifted significantly over the month," the minutes showed.
The Bank's aim is to hold the annual rise in the consumer price index to 2 percent, plus or minus one percentage point, a target which has been exceeded for 15 straight months.
Andrew Sentance again voted to raise the rate to 1 percent, and Spencer Dale and Martin Weale backed a hike to 0.75 percent, just as they did in February, the minutes showed.
One member, Adam Posen, again voted to pump another 50 billion ($81.5 billion) into the Bank's economic stimulus program of quantitative easing through asset purchases.
Despite worries about inflation, the minutes say that the majority thought a wait-and-see policy was justified because of uncertainties in the oil market and the weakness of household spending.
Since the MPC meeting, "the catastrophe in Japan and latest events in Libya add to the current uncertain outlook as they could have significant adverse repercussions for the global economy, so this adds to case for the Bank of England to hold fire on interest rates in the near term at least," said Howard Archer, chief European economist at IHS Global Insight.
Figures from the British Bankers' Association on Wednesday showed lending activity remained weak, with consumers continuing to repay more than they borrowed. The net repayment in February was 40 million pounds ($64 million), down from 219 million pounds net repayment in January but reflecting households' cautious outlook.
Another report from the association showed mortgage approvals for house purchases near a two-year low at 29,923, up from the recent low of 29,029 in December.
Market analysts expect the rate to rise later this year. "Overall, the chance of an early rate hike in April or May appears to have fallen despite the rise in inflation," said Chris Williams, chief economist at Markit Group.


Updated : 2021-08-04 14:52 GMT+08:00