Bank of England keeps interest rates at 0.5%

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.

When the Bank first made that short-term inflation forecast last month, it prompted investors to push back into late 2016 and 2017 their expectations of when the BoE was likely to finally start raising rates.

“With the Fed’s decision likely to increase financial market volatility and (south) Korea’s household debt rising, I don’t think the BoK would cut interest rates in the foreseeable future as it would exacerbate the problems”, Seo said.

But David Kern, chief economist at the British Chambers of Commerce, pointed out: “Even though the U.S. may raise rates this month, the European Central Bank has eased policy even further, and global headwinds persist”. The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.

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

The recent fall in oil prices give an indication that inflation outlook of the economy will be lower than expected; therefore, BoE will not be hurry to hike rates.

Of 18 dealers and analysts polled by Reuters, 15 said they expected it to keep rates on hold, mainly because markets anticipate a U.S Federal Reserve rate hike which would undermine the appeal of high-yielding emerging currencies.

Officials said low oil prices and subdued wage growth would keep a lid on inflation, similar to remarks from last month.

Bank of England governor Mark Carney has already said a decision to raise rates in the USA is “not decisive” for United Kingdom policymakers, stressing any such move on these shores will be made according to United Kingdom economic conditions.

He also voted for a quarter-point rise at each of the previous four meetings.

“The current inflation rate is actually negative 0.1 per cent”, says French.

The risk of unpredictable capital movements and market volatility has increased, according to the minutes of Bank of England released on Wednesday.

“Looking ahead the Board forecasts that inflation will continue at a low level, due mainly to the effects of the low oil prices”, said the BOK, which targets inflation of 2.5-3.5 percent.

For the majority of officials at the BOE, the outlook for growth and inflation in the United Kingdom doesn’t yet justify an increase in the central bank’s benchmark rate.