The Bank of England held its key interest rate at a record low yesterday, in line with its forward guidance, as UK Finance Minister George Osborne said the economy was strengthening.
The monetary policy committee (MPC) led by governor Mark Carney had kept the benchmark rate at 0.5 percent, the central bank said in a statement. The decision, forecast by all 48 economists in a survey, comes a week after officials removed some incentives for mortgage lending, warding off a potential risk to financial stability that could have voided guidance.
In August Carney linked the future path of borrowing costs to unemployment as he sought to give households and businesses certainty on low interest rates and said he would not undermine the recovery by tightening policy too soon.
Osborne said yesterday that while the Office for Budget Responsibility had raised its forecasts, growth was “not as strong as we would like”.
The MPC “seem united in the fundamental belief that inflation pressures will remain subdued as the economy recovers”, Jonathan Loynes at Capital Economics said. “Interest rates should be on hold for a prolonged period.” – Bloomberg