MPC voted unanimously to keep rates on hold
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Minutes from the October meeting of the Monetary Policy Committee showed members voted unanimoulsy to keep the Bank of England base rate on hold at 0.5%.
Members noted that lending to non-financial firms by banks remained weak. In part, this was likely to have reflected the decision by some companies to raise funds from capital markets to repay bank debt.
They had seen a small increase in sterling bank lending in August, but this had followed several months of repayments.
And while it belived there were some signs, including from the Bank’s most recent credit conditions survey that the availability of bank credit had begun to improve, and the terms on which it could be accessed were stabilising. Over a longer horizon, the availability of bank credit would depend on the ability of banks to complete the process of their own balance sheet adjustment.
And although UK banks had raised nearly £50bn of core tier 1 capital since the start of 2009, but it was likely that significantly more would be needed to meet future capital requirements and to guard against future losses.
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