View more on these topics

Bank of England holds rates at 0.5%

Bank-of-England-BoE-Clock-700x450.jpg

The Bank of England’s Monetary Policy Committee has voted unanimously to keep the base rate at 0.5 per cent, marking nearly seven years of unchanged rates.

The committee voted 9-0 to keep base rates at their current low levels. At the last meeting just one member, Ian McCafferty, voted for a rise, saying he expected inflation to increase faster than the committee’s expectations.

Markets are increasingly pessimistic of a rate rise this year and are now pricing in a higher probability of a rate cut this year than a rise.

“Looking forward, the plunging oil price has taken over from the global financial crisis in discouraging the Bank of England from raising interest rates. The deflationary effect of cheaper fuel and energy is likely to keep policy makers hiding in their dovecotes for some time to come,” says Laith Khalaf, senior analyst at Hargreaves Lansdown.

“At the moment UK monetary policy is being held in check by two opposing forces; low inflation on the one hand, and a growing economy on the other. Should the economy falter, the scales will start to tip towards loosening monetary policy once again, either through an interest rate cut, or more quantitative easing.”

Governor Mark Carney recently made a speech highlighting that UK growth and inflation had been more sluggish than expecting, prompting many to assume any interest rate rise had been pushed out to late 2016.

Recommended

Bank-of-England-BoE-Clock-700x450.jpg

BoE: Mortgage approvals up 21%

Mortgage approvals rose 21.2 per cent year-on-year in December, from 102,910 to 124,803, according to new Bank of England figures. The total value of approvals rose 31.5 per cent, from £15.2bn in December 2014 to £20bn last December. House purchase approvals rose 18 per cent year-on-year in December to 70,837 from 60,275. The value of […]

Home-House-Monopoly-Money-Property-700x450.jpg

BoE: Approvals up 21.8% in October

Approvals rose 21.8 per cent year-on-year in October, says the Bank of England. The latest money and credit figures show 121,438 loans were approved in October – up from 99,644 12 months earlier. House purchase approvals rose 17.1 per cent year-on-year to 69,630 in October, while remortgage approvals were up 27 per cent to 39,629. […]

Mark-Carney-BoE-700x450.jpg

BoE’s Carney warns EU to reduce regulation

Bank of England governor Mark Carney has warned that European Union regulation needs to be more flexible and tailored to member states or it will risk the Bank’s ability to oversee the UK economy. Speaking at the Cairncross memorial lecture at St Peter’s College, Oxford last night, Carney laid out the BoE’s stance on Britain’s membership of […]

Mark-Carney-with-bank-note-in-background-700.jpg

BoE’s Carney warns of climate change financial stability risks

Bank of England governor Mark Carney has warned investors they could face “huge” financial losses due to climate change. Speaking at a gathering of insurers at Lloyd’s of London last night, Carney said the challenges posed by the weather-related catastrophes “pale in significance compared with what might come”, the BBC reports. He said insurers are the most exposed […]

Newsletter

News and expert analysis straight to your inbox

Sign up