The Bank of England maintained its key policy rate at its historic low once again as policymakers await more concrete signs to suggest that the economic recovery is becoming sustainable amid slowing inflation.
The nine-member Monetary Policy Committee decided on Thursday to retain its key rate at a record low 0.50 percent and the asset purchase programme at GBP 375 billion.
At the September meeting, only Ian McCafferty and Martin Weale sought a quarter point hike as seen in August. They observed that even after a 25 basis-point hike, monetary policy remains extremely supportive.
But other members assessed that evidence is insufficient to justify an immediate increase in interest rate. More members are likely to join the two hawks only by early 2015.
Governor Mark Carney suggested last month that the time for raising rates is getting closer and the timing of such an action will depend on the data.
The National Institute of Economic and Social Research said Tuesday it expects the first rate hike to come in February 2015.
IHS Global Insight's Chief UK Economist Howard Archer said he expects a rate hike to 0.75 percent in February but there looks to be a very real possibility that it could delay acting until nearer mid-year.
The International Monetary Fund warned on Tuesday that the United Kingdom faces financial stability risks arising from housing and mortgage markets. Housing supply-side measures are crucial to safeguard housing affordability and mitigate financial stability risks.
Earlier this month, the BoE sought more powers to regulate mortgage lending in order to protect property market from overheating and avert risks to financial stability.
In a letter to Chancellor, Carney said the Help to Buy scheme does not pose material risks to financial stability.
Mortgage approvals fell to a 3-month low of 64,212 in August from 66,100 in July. According to Credit Conditions survey, British banks expect demand for secured lending for house purchase to increase in the fourth quarter after falling in the third quarter.
Meanwhile, the IMF maintained its estimates for the U.K. even as it downgraded its growth projections for the global economy. The lender estimated 3.2 percent economic growth for the U.K. this year and 2.7 percent the next year.
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June 19, 2026 16:46 ET Major central banks continued to dominate the economic news flow this week too, led by the Federal Reserve, as they announced their latest policy decisions. The Federal Reserve policy session was in focus as it was the first to be led by the new chief Kevin Warsh. In Europe, central banks of the U.K. and Switzerland announced their rate decisions. In Asia, the Bank of Japan drew attention for its policy moves, while data out of China threw some light on the state of the economy.