Bank of England holds base rate again

“Any decision to vote to change Bank Rate will be made on the basis of the balance of risks, but with the comfort that, if subsequent developments mean that any increase needs to be reversed, that can be done”.

But he is seen by economists as the most likely candidate to join Ian McCafferty who was the lone proponent of a rate hike at the BoE’s policy meetings in August and September.

Forbes suggested central banks need to look again at how they factor in currency movements and that in the UK’s case, the pound’s strength should not necessarily delay a rate rise.

The Bank of England has voted to keep its interest rate at a record-low 0.5 per cent while cutting economic growth forecasts and warning of global “headwinds”.

She said: “Firstly, contrary to the academic literature, CPI (Consumer Prices Index rate of inflation) components with higher import intensities do not seem to be systematically more sensitive to changes in the exchange rate”.

The severity of the rouble’s plunge is taking precedence over the intensifying recession for the central bank, which also has to contend with possible monetary tightening by the US Federal Reserve and the global fallout from China’s economic downturn.

“When major worldwide organisations such as the World Bank and the International Monetary Fund have warned against putting up interest rates it would be premature and risky for the United Kingdom to consider such a step, and the MPC must hold fire and should not consider rate increases until well into 2016”.

Because of below target inflation, the MPC has collectively judged that there are some underutilised resources in the economy and intends to set monetary policy in order to ensure that growth is sufficient to absorb the remaining economic slack so as to return inflation to the target within two years.

Vicky Redwood, chief United Kingdom economist at Capital Economics, said there was little pressure on the MPC to raise rates soon.

The Bank of Russian Federation has nearly rolled back last year’s emergency rate increase with five cuts since January, shaving 6 percentage points off borrowing costs.

Overall the amount of new housing being built is now 2.5 per cent below previous year, according to the Office for National Statistics – the first decline since March 2013.

The BOE also stuck to its view that inflation will start to pick up around the turn of the year, though it noted that a drop in oil prices had increased uncertainty about the near-term outlook.

Half of Britons surveyed by the Bank of England expect interest rates to rise over the next 12 months, which was the strongest share in four years, results of a quarterly survey showed Friday.

Since then, the key interest rate has been gradually decreased in response to the ruble regaining some of its value.