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Bank of England voted 7-2 to hold interest rates | Bank of England voted 7-2 to hold interest rates |
(35 minutes later) | |
Persistently low inflation prompted a majority of members on the Bank of England's Monetary Policy Committee to keep interest rates on hold. | Persistently low inflation prompted a majority of members on the Bank of England's Monetary Policy Committee to keep interest rates on hold. |
Seven members voted to keep rates at 0.5%, while two wanted a rise to 0.75%. | Seven members voted to keep rates at 0.5%, while two wanted a rise to 0.75%. |
The minutes of the November meeting showed that Ian McCafferty and Martin Weale again voted for an increase. | The minutes of the November meeting showed that Ian McCafferty and Martin Weale again voted for an increase. |
The minutes said that there had been a "material spread of views" on the committee on the risks to the outlook for inflation. | |
"For most members, the outlook for inflation in the medium term justified maintaining the current stance of monetary policy," the minutes stated. | "For most members, the outlook for inflation in the medium term justified maintaining the current stance of monetary policy," the minutes stated. |
There had been some market speculation that either Mr McCafferty or Mr Weale would stop voting for an immediate rise in rates, which they have done since August. | |
Sterling rose by half a cent to $1.5648 and strengthened against the euro after the minutes were released. | Sterling rose by half a cent to $1.5648 and strengthened against the euro after the minutes were released. |
The minutes stated: "Below-target inflation was judged to be partly the consequence of a margin of spare capacity bearing down on domestic costs and prices. | The minutes stated: "Below-target inflation was judged to be partly the consequence of a margin of spare capacity bearing down on domestic costs and prices. |
"A prolonged period in which inflation was below the target created at least the possibility that medium-term expectations of inflation would begin to drift downwards. This had the potential to lengthen the period for which inflation itself would remain below 2%." | "A prolonged period in which inflation was below the target created at least the possibility that medium-term expectations of inflation would begin to drift downwards. This had the potential to lengthen the period for which inflation itself would remain below 2%." |
Inflation rose to an annual rate of 1.3% in October, up from 1.2% in the previous month, official figures released on Tuesday showed. The Bank aims to maintain inflation at 2%. | Inflation rose to an annual rate of 1.3% in October, up from 1.2% in the previous month, official figures released on Tuesday showed. The Bank aims to maintain inflation at 2%. |
Last week, the Bank of England warned the inflation rate could dip to as low as 1% in the coming six months. | Last week, the Bank of England warned the inflation rate could dip to as low as 1% in the coming six months. |
Interest rates have been held at 0.5% since March 2009 in a bid to aid economic recovery. | Interest rates have been held at 0.5% since March 2009 in a bid to aid economic recovery. |
All nine members of the MPC voted to make no change to quantitative easing, or buying government bonds. | All nine members of the MPC voted to make no change to quantitative easing, or buying government bonds. |
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