Bank of England leaves policy unchanged but 3 members vote for a hike

Bank of England Governor Mark Carney speaks at 2017 Institute of International Finance (IIF) policy summit in Washington, U.S., April 20, 2017
Reuters/Yuri Gripas

LONDON – The Bank of England, as expected, left monetary policy unchanged on Thursday.

That means interest rates stayed at a record low of 0.25%, and the bank’s QE programmes remain capped at £435 billion, despite the surge in the rate of inflation to the highest level since mid-2013.

The bank’s Monetary Policy Committee voted 5-3 in favour of holding rates at their current levels.

Falling sterling has pushed up the price of importing goods, passing through to everyday items that regular Brits buy.

This is now showing up in official inflation data, which at the latest reading sat at 2.9%.

In normal circumstances, such high inflation would likely push the bank to increase rates, but it must also balance the fact that the wider British economy is set to slow sharply in 2017, driven by Brexit-related uncertainty, and that the sharp growth in inflation seen in the UK right now is likely to be temporary.

As the announcement is a normal MPC meeting, there is no associated press conference, however Governor Mark Carney will speak later on this evening, delivering a speech at London’s Mansion House alongside Chancellor of the Exchequer Philip Hammond.