Bank of England’s Carney speaks on ‘super Thursday’

The Bank of England (BoE) Thursday voted 8-1 to keep its main interest rate Bank Rate unchanged at 0.5 percent, and kept the quantitative easing (QE) policy at 375 billion pounds.

It was the first time that the central bank had published minutes immediately after the meeting – a switch made by Canadian national Carney that is aimed at providing more transparency.

The bank’s report increased its forecast for expansion of the UK economy this year from 2.5 to 2.8 per cent, mainly as a result of strong consumer demand. While wages have risen more quickly in recent months, there was not yet much inflationary pressure, Broadbent said.

In the quarterly report, the Bank of England downgraded its short-term forecast for inflation, citing the plummeting commodity prices.

Economists had expected at least two rate setters to break ranks and vote for an interest rate rise for the first time this year – but in the end only hawk Ian McCafferty voted alone.

“The committee intends to set monetary policy in order to ensure that growth is sufficient to absorb the remaining economic slack so as to return inflation to the target within two years”, the statement said.

‘Bank governor Mark Carney has stated that rates are likely to start rising around the turn of the year, and today’s news will cement expectations that it’s more likely to be after the New Year than before, ‘ he said.

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

In addition to the interest rate, there’s a whole bunch of other factors that will mean your mortgage will increase.

Sterling was alone among major currencies in resisting a resurgent dollar on Wednesday, pointing to growing expectations that the Bank of England will follow swiftly on the heels of any rise in US interest rates.

The data was met by a muted response in the UK market, with the FTSE 100 index 0.04 per cent below its opening level of 6750 by early afternoon trading, erasing a minor spike to 6763 at lunchtime.

Peter Cameron, assistant fund manager at EdenTree Investment Management, added: “The waters have been muddied of late – on the one hand oil prices are falling again, but countering that is stronger than expected wage growth”.