The Bank of England kept its key interest rate at a record low once again at the start of the year amid growing concerns about inflation falling below 1 percent in months ahead.
The Monetary Policy Committee, governed by Mark Carney, decided to hold the key bank rate at 0.50 percent and the size of asset purchases at GBP 375 billion at the end of the two-day rate setting meeting on Thursday.
That was in line with economists' expectations. The interest rate has been at a record low since early 2009 and is expected to remain so at least until the final quarter of 2015 as lower oil prices feed into inflation.
The bank also decided to reinvest the GBP 4.35 billion of cash flows associated with the redemption of the January 2015 gilt held in the Asset Purchase Facility.
At the previous five meetings, policymakers Ian McCafferty and Martin Weale sought a quarter-point hike. The bank will release the voting pattern of today's meeting on January 21.
IHS Global Insight's Chief UK Economist Howard Archer said it would currently be a major surprise if the BoE raised interest rates before the final months of this year given the current disinflationary impact of very low oil prices and the risk that UK growth could be hampered by mounting political uncertainty ahead of May's general election and problems in the Eurozone.
Inflation eased to 1 percent in November, the lowest since September 2002. Inflation has remained below the 2 percent target since January.
According to BoE, mortgage approvals declined to a 17-month low in November. Approvals declined to 59,029 from 59,511 in October.
The moderation in housing activity has reined in significantly on house prices. Today, a survey from Halifax showed that the weakening in housing demand has led to a reduction in both price growth and sales in recent months.
Martin Ellis, housing economist at Halifax, expects a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5 percent in 2015.
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