Business

Bank of England committee unanimous on holding rates

Bank of England Image copyright AFP

Bank of England policymakers voted unanimously to hold interest rates at their current historic low of 0.5% again in April, the minutes of the latest meeting show.

It comes as inflation sits at a record low of 0%.

Bank policymakers expect the Consumer Prices Index (CPI) to fall into negative territory in the coming months and to remain low this year.

And they remain concerned about low wage growth, the minutes show.

Figures from the Office for National Statistics (ONS) earlier this month showed average wages excluding bonuses rose by 1.8% in the thee months to February compared with the same period a year earlier.

But while wage rises are now well ahead of inflation, Bank policymakers fear they are not rising quickly enough to meet the Bank's 2% inflation target in the medium term.

The minutes come a week before the ONS publishes its first estimate of UK economic growth for the three months to the end of March.

The Bank minutes showed policymakers thought there was still a risk of "weak price pressures persisting for longer than would be consistent with bringing inflation back to target within two years", despite evidence that the eurozone economy was beginning to show signs of improvement.

But on a more upbeat note, Monetary Policy Committee (MPC) members thought it was unlikely that economic growth could continue at its current pace for long without generating greater inflation in wages and prices.

Samuel Tombs, senior UK economist at Capital Economics, said the latest minutes showed inflation was unlikely to return to its 2% target until "well into 2016" and would remain near zero for much of the rest of this year.

He added that he expected there would be little pressure on Bank policymakers to raise interest rates until the middle of next year and that interest rates were unlikely to rise above 1% before the end of 2016 and 1.5% by the end of 2017.

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