The Bank of England on Thursday left its key interest rate unchanged once again at its two-day monetary policy meeting after policymakers split on the decision last month for the first time since mid 2011.
The Monetary Policy Committee, governed by Mark Carney, decided to leave its key rate at a historic low 0.50 percent and the asset purchase programme at GBP 375 billion.
In August, MPC members Ian McCafferty and Martin Weale sought a quarter-point hike, but other seven members outvoted their proposal. It was the first split on rates since July 2011.
Markets expect other members to join their call for a rate increase only by early 2015.
"We suspect that low inflation, current very weak earnings growth, and the increased downside risks to economic activity coming from heightened geopolitical tensions and stuttering Eurozone economic activity will cause the Bank of England to be cautious," IHS Global Insight Economist Howard Archer said.
"It is also likely that most MPC members would have been wary of raising interest rates just before the Scottish independence vote due to the potential near-term negative impact that a yes vote could have on the UK economy through increasing uncertainty," Archer added.
Last month, members said any rise in interest rate ahead of any pickup in wages and income growth will be vulnerable to highly indebted households, and might further cause the currency to appreciate.
Central bank data this week showed that mortgage lending to households increased GBP 2.3 billion in July, the highest since mid-2008, as low interest rate and robust recovery improved appetite for borrowing.
However, mortgage approvals declined to 66,569 from 67,085 in June in response to strict lending standards introduced this year.
The strong momentum in economic activity has not translated into high inflation. In July, inflation eased to 1.6 percent from 1.9 percent in June. It has been below the 2 percent target since last January.
But, wages declined for the first time since 2009 and the unemployment rate hit the lowest since 2008. During the three months to June, pay including bonuses for employees was 0.2 percent lower than a year earlier. The ILO jobless rate fell to 6.4 percent during the same period.
BoE estimates wage growth of 1.25 percent on average this year and inflation to be around 1.8 percent in two years' time.
Last month, Carney said interest rates will not rise soon as wage growth remain subdued and the economy faces challenges from the external environment.
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