Bank of England holds interest rates at 0.5%

Officials’ most recent forecasts suggest the BOE will start gently increasing borrowing costs in the first half of next year.

Mr McCafferty argued for an immediate rise in the BOE’s benchmark rate to 0.75 per cent to keep future inflation in check. The pressure on prices, from wages rising remained mute.

The International Monetary Fund have in fact increased the forecast for the countries growth by 0.1% to 2.5% this year starting from July.

Markets have been more positive on the whole this week as we appear to have re-entered into a phase of bad news being good news and investors rewarding the prospect of interest rates being lower for longer.

As a result of below target inflation and the possibility that spare capacity remains in the economy, the MPC said it intends to set monetary policy so as to ensure that growth is sufficient to absorb any remaining underutilised resources. His overall impression was that rate-setters were more anxious about global economic developments.

There was also a big slowdown in manufacturing when compared to a year ago, as exports were struck with a low demand and a strong pound, despite industrial production improvements.

Jeremy Duncombe, director Legal & General Mortgage Club, said although yesterday’s inaction was no surprise, a base rate rise is inevitable at a few point. This is already having a knock-on effect on the rest of the world as many countries rely on China for their exports.

The United Kingdom should not wait until “all the lights are flashing red in the economy” before raising rates, he said.

The MPC also voted unanimously to maintain its quantitative easing programme of £375bn ($574bn), a measure introduced in a bid to stimulate the British economy after the financial crisis of 2008.

“And when it does come, it will have a significant impact on mortgage rates, even if the increase itself is quite small”.

Then there are the “hawks” calling for a rise, who cite falling unemployment as a sign that inflationary pressure might be building up in the background.

The BOE is due to release its latest rate and asset-purchase program decisions on Thursday, alongside the minutes of the Monetary Policy Committee’s meeting. A flurry of economic data published on Thursday has something for those on both sides of the divide.

Traders will be looking for guidance from the Fed regarding the timing of the next rate hike.