MercoPress. South Atlantic News Agency

Bank of England leaves interest rate on hold at 0.5%; eyes set on minutes to be released 09/17

Bank governor Mark Carney has made clear that any rate rises would be small and gradual.

The Bank of England has held UK interest rates at a record low of 0.5% for another month. The size of the Bank's economic stimulus program - quantitative easing - was also unchanged at £375bn.

Rates have been at 0.5% for five years, but as the economy recovers there are expectations of a rise early next year.

Last month, minutes of the Bank's interest rate meeting in early August showed that two policymakers voted for a rise. This was the first time in three years that rate-setters on the Bank's nine-member Monetary Policy Committee (MPC) had done so.

Minutes of the latest MPC meeting are due to be published next week.

Debate over the timing of any rate rise has intensified amid publication of more positive economic and consumer data. However, Bank governor Mark Carney has made clear that any rate rises would be small and gradual.

And there are still many economists who feel that the slow growth in wages means that households and businesses would suffer if rates increase too soon.

Analysts say a 0.25% rate rise translates into an annual increase of £250 on a typical mortgage. However, pressure to raise rates eased last month with official figures showing that inflation fell to 1.6% in July, while wages fell 0.2%.

Nevertheless, some economists still believe a rise could come this year, partly because an increase next year may be too close to the general election in May.

The release said that “The Bank of England’s Monetary Policy Committee at its meeting today voted to maintain Bank Rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion, and so to reinvest the £14.4 billion of cash flows associated with the redemption of the September 2014 gilt held in the Asset Purchase Facility.

”The minutes of the meeting will be published at 9.30 a.m. on Wednesday 17 September”.