The Bank of England’s (BoE) Monetary Policy Committee (MPC) meeting Thursday 10th of December has voted by a majority of 8-1 to maintain Bank Rate at 0.5%.
The MPC sets monetary policy aiming to meet the 2% inflation target in a way that helps to sustain growth and employment. The Committee voted unanimously to maintain the issuance of central bank reserves at £375 billion to finance the purchase of stock assets.
CPI inflation remains at -0.1% in October year-to-date, just over 2 percentage points below the BoE inflation target.
Inflation is expected to have risen slightly in November, and projections show further rises as the large falls in energy and food prices 12 months ago start to drop out of the annual comparison. Nevertheless, core inflation remains subdued, and CPI inflation is expected to stay below 1% until the second half of next year, looking like a slow approach to interest rate rises.
The MPC intends to return inflation to its target 2% in a sustainable manner without overshoot in around two years’ time, and keep it there, failing further shocks to the financial system.
Global growth has been stable but well below historical average. Domestic activity is little changed on last month, with robust growth in private domestic spending continuing to counter-balance subdued demand growth overseas.
Despite higher unemployment figures, pay growth appears to have flattened off and the balance between pay and productivity growth remains a key component of the MPC’s policy assessment.
All members agreed that with the headwinds the economy faces, when the Bank Rate does begin to rise it is expected to do so gradually and to a lower level than in recent cycles. The Bank says the path the Bank Rate follows over the coming years depends on economic circumstances, and the guidance it gives “is an expectation, not a promise”.
BoE Monetary Policy Summary here
The Bank of England maintains bank rate at 0.5% – https://t.co/mGB9SFXhRL
— LandlordZONE (@LandlordZONE) December 10, 2015