Bank of England policymakers decided to leave its key rate at a historic low of 0.50 percent in a split vote for the third straight time at the meeting held early this month as a majority of members noticed increased risks from slowing global economy, especially in euro area.
Ian McCafferty and Martin Weale sought a quarter point hike in the bank rate, to 0.75 percent, while other seven members including Governor Mark Carney voted to keep the rate unchanged at 0.50 percent, the minutes of the Monetary Policy Committee meeting showed Wednesday.
The voting pattern of the meeting, held on October 7-8, was similar to the previous two meetings.
Regarding the stock of purchased assets, the MPC unanimously voted to leave the the programme unchanged at GBP 375 billion.
For McCafferty and Weale, economic circumstances were sufficient to justify an immediate rise in Bank Rate.
In the judgment of these members, even after a rise of 25 basis points, monetary policy would remain extremely supportive, and an early rise would facilitate the committee's aspiration that any subsequent rises in Bank Rate should be only gradual.
But for most members, there remained insufficient evidence of prospective inflationary pressure to justify an immediate increase in the interest rate. McCafferty and Weale said keeping the rate at record low for too long risked unbalancing the recovery.
Majority of members said the U.K. economy had been growing sufficiently quickly to absorb some of the slack in the economy, while there were some signs that the pace of growth was beginning to ease.
The housing market appeared to be cooling with house price growth slowing to a more sustainable pace. Moreover, further downside news in the euro area increased the risks to the durability of the U.K. expansion.
The British economy grew 0.9 percent in the second quarter. The International Monetary Fund forecasts the U.K. economy to grow 3.2 percent this year and 2.7 percent in 2015.
The EY ITEM Club forecast economic growth to ease to 2.4 percent next year from an estimated 3.1 percent in 2014. The think tank said Monday political uncertainty at home and abroad now tops the worry list and is set to dampen business investment.
IHS Global Insight's Chief UK Economist Howard Archer said he does not think that the BoE will delay raising interest rates past mid-2015 as UK growth is set to hold up relatively well over the coming months, barring a major global downturn.
For comments and feedback: editorial@rttnews.com