BoE policy setters vote 8-1 to keep rates unchanged at record low

By FXStreet FXStreet (Mumbai) – The Bank of England decided to keep its key interest rate at a record low of 0.5 per cent at its January meeting, matching market expectations. The MOC members voted 8-1 to keep rates unchanged. Inflation remains at 0.1 per cent, way well below the official 2 per cent target and thus the MPC members thought it was best to not raise rates at this juncture.

Eight of nine MOC members felt keeping rates unchanged would “best balance the risks” to the economy and inflation. Ian McCafferty continued to be the lone hawk. He voted in favour of a 25 basis-point increase.

The drop in oil prices to multi year lows have kept prices in check. Crude prices have fallen to near $30 a barrel and this will hinder inflationary pressure from rising in the short term. It also implies tough times ahead for UK’s energy sector. However, there may be some benefits of low oil price. The MPC memebers would like to believe that fall in oil price would lift spending in the U.K., thereby supporting prices. “Although the most recent declines in oil prices will depress global inflation in the near term … these conditions should in …read more

Source:: FX Street