UK rate hike fears recede, emerging markets on edge

Despite the central bank maintaining the key rate, governor Mark Carney insisted that the time for a hike is moving closer.

However, Sentance said that it’s likely that “two or three members of the committee” voted for rise in rates.

“These are welcome statistics which would suggest the time for a rate rise is getting closer, but the bank is clearly anxious about underlying economic weakness facing the UK”.

“Rates look the more attractive venue, where despite hawkish policy signals, markets still price a May 2016 hike and just 30 percent probability it occurs this year“.

Kathleen Brooks, research director at Forex.com, said: ‘Yet again the Bank has hinted that rates could rise sooner than the market expects only to backtrack down the line’.

Dubbed Super Thursday by City analysts because of the simultaneous release of the result of the MPC’s monthly policy meeting; the publication of the minutes; the BoE’s quarterly inflation report, and governor Mark Carney’s press briefing, the announcement was somewhat of an anti-climax.

The minutes showed the Bank’s concerns about the strength of the pound weighing on inflation, which fell back to zero in June, in the near term.

Rates have been held at 0.5 per cent since 2009 to help promote a recovery.

As the Bank of England reports today Helal Miah, investment research analyst at The Share Centre, explains what the decisions means for investors. Economists on the street continue to remain positive about the growth in the UK economy and believe that the slightly lower reading would deter the hawks in the Bank of England to hike interest rates any time in the near future.

There has traditionally been a two-week gap between the release of its interest rate decision and the minutes of the Monetary Policy Committee (MPC) meeting which reaches the rate figure.

The two were the only MPC members to vote for a rate rise last year, before the oil price crash and the eurozone crisis sparked deflationary fears. However, with the economy now recovering strongly and wages finally rising quickly, speculation is growing about when it might decide to start weaning Britain off low rates. “This is understandable and it’s another welcome sign of an economy that is returning to normal”.

Mr Carney said in a recent speech that a decision on a rise would “come into sharper relief around the turn of this year”.

Stock market turmoil in China and Greece’s debt problems cast only a small shadow on the global outlook, the BoE said.