MPC votes to keep base rate at record-low level

The Bank of England’s Monetary Policy Committee has once again voted to keep base rate at 0.5 per cent and its programme of quantitative easing at £375bn.

The decision was widely expected as BoE governor Mark Carney has said base rate would not rise until unemployment falls below 7 per cent or there is an unexpected spike in inflation. But even then a rate rise is not guaranteed.

Macroeconomic consultancy Capital Economics predicts the first rate rise will not come until 2016.

The consultancy’s chief European economist, Jonathan Loynes, says: “The committee members seem united in the fundamental belief that inflation pressures will remain subdued as the economy recovers. As such, interest rates should be on hold for a prolonged period yet.”

Base rate has remained at its current level since March 2009, when the MPC first voted to cut rates to record-lows in a bid to help stimulate the economy. On the same day the MPC launched its programme of quantitative easing. 

The quantitative easing programme was increased by £50bn to £375bn in July 2012, though the committee has voted in factions since then with some members, including former governor Mervyn King, voting in favour of a further increase to the size of the