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BoE's policy makers vote unanimously on maintaining interest rates

Xinhua, February 18, 2015 Adjust font size:

The Bank of England (BoE)'s nine-member Monetary Policy Committee (MPC) voted unanimously on maintaining the benchmark interest rate, as the risk of deflation mounts in the country, according to the central bank's meeting minutes published on Wednesday.

However, the policy makers looked beyond the possibility of temporary deflation to discuss the option of raising the interest rate later on.

The British central bank announced on Feb. 5 that the bank rate would stay at 0.5 percent and the stock of asset purchases, or quantitative easing policy, would remain at 375 billion pounds (or 578 billion U.S. dollars). It is the second month of opinion consensus among the policy makers on interest rates.

During the five consecutive months ending December 2014, however, there was a two to seven opinion split on the interest rate decision. Two policy makers, Ian McCafferty and Martin Weale, preferred to raise interest rates immediately.

In the most recent February meeting, the MPC believed that given the reduction in oil prices, inflation would decline further - probably to around zero - in the spring of 2015, and stay at around that level for several months. The minutes said it was "more likely than not" that CPI inflation would dip briefly below zero at some point in the first half of the year.

Data from the Office for National Statistics (ONS) showed Britain's consumer-price inflation rate experienced a record low of 0.3 percent in January 2015, lower than the previous month's 0.5 percent.

But the MPC noted that given the likely persistence of headwinds slowing down the economy, when the benchmark interest rate or bank rate did begin to rise, it was expected to do so only gradually, meaning the bank rate was expected to stay below average historical levels for some time to come.

The policy makers also judged that after the effects of energy and food price fluctuations had abated, the inflation rate would return to the target 2 percent. As a result, the committee would seek to set monetary policy so that this would take place within two years. Endit