Bank of England votes 6-3 to hold interest rates at 0.5%

Cornelia Mascio
Giugno 21, 2018

The Bank of England has held interest rate at 0.5% after the Monetary Policy Committee voted 6-3 in favour of no rise on Thursday.

Savers will be cheered by the hope of rates rising, however, nearly a decade after base rate was cut to 0.5 per cent, as an emergency measure during the financial crisis.

However, an August rise is by no means a done deal and economists are split on whether rates will even go up this year.

Mr Haldane is seen as an influential member of the Monetary Policy Committee, which sets interest rates in order to target inflation at 2 per cent support the United Kingdom economy.

As economic momentum improves, fears over rising inflation grow and pressure increases for interest rates to rise. Ian McCafferty and Michael Saunders were the other two members on the nine-member rate-setting panel who favoured a rate rise.

Before today's decision the markets were split 50/50 on whether there would be a rate rise at the MPC's next meeting in August.

Chances of an August rate rise were boosted, however, after the Bank's chief economist Andy Haldane voted to raise the borrowing cost to 0.75%.

- The BOE's decision to keep rates on hold was unsurprising, but the 6-3 vote (from 7-2 last meeting) was.

He added: "Sterling jumped on the news, gaining nearly a cent against the dollar as traders factored in a bigger chance of a move in August".

"Policymakers also remain upbeat about wage growth - a central part of the Bank's thinking on rate hikes - suggesting that the recent moderation we've seen in average earnings hasn't fazed the committee".

It said: 'These members had a higher degree of confidence that the slowdown in the first quarter was temporary or erratic and would largely be unwound'.

On the foreign exchanges the pound, which had been down against the dollar at $1.31 ahead of the announcement, rallied to $1.3220, a gain of half a cent.

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