The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 8-1 to maintain the Bank Rate at 0.25%.
With the US Federal Reserve deciding to increase rates yesterday and UK inflation on the rise, analysts believe the MPC could vote for a Bank Rate over the coming months.
The MPC also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves – so-called ‘quantitative easing’ at £435 billion.
Jeremy Duncombe, director of Legal & General Mortgage Club, added: “The Bank of England has chosen not to follow the Fed by voting for a rate rise – no surprise there. The logic suggests that UK economy is not ready for a rate rise, especially with Article 50 just weeks away.
“Today’s announcement from the Bank of England is good news for borrowers. Borrowers on an SVR could save themselves around £2,000 a year by switching to a better deal. They should speak to a mortgage broker to make sure they’re on the best possible deal for their circumstances – after all, these rates won’t be around forever.”
Carlo Alberto De Casa, chief analyst at ActivTrades, added: “There was expectation in the market over the voting make-up of the Bank of England and the pound has reacted well. It staved off the threat of dipping below 1.20 against the dollar following the troubles of this week and shortly after the BoE decision rose up to 1,234. It also recovered against the Euro at 1.15.
“There was talk of a 6-3 vote which actually materialised as 8-1. When it comes to inflation, the world is a different place with it being at 2.7% in the US and 2% across the Euro Zone. The UK could experience 2% very soon and the Bank of England wants and needs to stay ahead of the curve. The market reaction to this is clear – a rate rise could come in months.”