BoE keeps rates on hold at record low for another month

Officials added that there would have to be a sustained firming in the domestic cost pressures to push inflation up to the target of 2%.

The Treasury also made partial awards of the T-bills auctioned off in October and November mainly on higher bid rates resulting from “uncertainty” in the market pending the US Fed decision.

Real wage growth has also returned, and most members of the MPC (except BoE chief economist Andy Haldane) are clear in suggesting that the next move from the Bank will be a rate hike, which will begin a steady tightening cycle, raising interest rates slowly.

The statement noted that the global economy is expected to keep a modest recovery, but it said that the change in the US monetary policy would increase the global financial market’s volatility and weaken growth in emerging economies.

Regarding concerns that the government’s one-time consumption-boosting measures may trigger a consumption cliff next year, Lee said the chances of this were slim, citing improvement in the average purchasing power caused by by steady wage growth and low oil prices.

The central bank expects inflation to remain below 1 percent until the second half of next year.

The pound’s initial decline after the meeting’s minutes were published Thursday was short-lived, and Britain’s currency swung between gains and losses versus the USA dollar for much of the afternoon.

Just 35 percent of Britons polled in the days after it released a relatively dovish set of economic forecasts last month expected a rate rise in the next 12 months, down from a four-year high of 50 percent in August.

“Fiscal consolidation and benign inflation are not enough to prompt the NBS to cut as external financing risks take center stage”, she said before the announcement. Korea’s Kospi rose 0.2% as the Bank of Korea kept rates unchanged at 1.5%, one of the few equity benchmarks making gains in Asia-Pacific.

And with eight out of nine members of the Bank’s Monetary Policy Committee (MPC) voting to hold again in December, change is not expected any time soon.

The projected return of CPI inflation to the target depends on an increase in domestic cost growth sufficient to balance the drag on prices from very subdued global inflation and past increases in the value of sterling.

It seems increasingly likely that the Federal Reserve will finally increase interest rates when it meets later this month, ending a near-zero rate policy that has been in force since December 2008.

Economists predict the panel will keep the key rate unchanged until well into next year.