Bank of England holds rates, policy members vote 8-1 in favor

The Central Bank of Brazil kept its key interest rate on hold for the third consecutive meeting at 14.25% last month, the highest in nine years, as policymakers struggle to curb rising inflation amid economic contraction. At the Committee’s meeting ending on 9 December, eight members judged it appropriate to leave the stance of monetary policy unchanged at present.

The BoE’s inflation attitudes survey of about 2,000 people was carried out last month in the days following its quarterly inflation report, in which it cut its growth and inflation forecasts for the coming years.

Median predictions for core PCE inflation, which the Fed watches closely, haven’t fluctuated much in half a year of monthly Reuters polls, now in a 1.5-1.7 percent range for 2016.

The private consumption, however, posted a recovery thanks to the record-low interest rate and the government’s measures to stimulate the economy.

The MPC left the bank rate unchanged at 0.50% and stocks of purchased assets at GBP375bn.

United Kingdom manufacturing in an unexpected pre-Christmas slump – output fell 0.4 per cent in October.

The accompanying minutes release is expected to once again show an 8-1 vote split in favour of keeping rates on hold. Once again, Ian McCafferty is expected to cast the sole vote for a rate hike this month but it will be interesting to see if anyone else within the committee is close to joining him.

In the summer Bank of England Governor Mark Carney raised hopes by suggesting interests could rise at the turn of the year and by early 2016.

Looking ahead the Board forecasts that inflation will continue at a low level, due mainly to the effects of the low oil prices.

The Bank also noted that nominal pay growth, the amount workers are paid in cash not adjusted for inflation, had flattened recently.

In Britain, muted inflation and collapsing oil prices mean that there is little prospect of a hike in United Kingdom interest rates any time soon, economists say.

The comittee is also anxious about the fallout from the European Central Bank’s stimulus policy – the central bank also reduced interest rates in December.

Many investors have called on the Bank to start “normalising” monetary policy to wean borrowers off super-cheap credit as the economy recovers, and to reward savers who have suffered seven years of paltry returns.

The US Department of Labor announced last Friday that the economy added 211,000 jobs in November, slightly better than expectations, with the unemployment rate remaining steady at 5%.