BoE to keep interest rates unchanged for the 70th consecutive meeting

The Bank of England’s Monetary Policy Committee left interest rates on hold at the opening meeting of 2015.

Analysts believe it is likely that the nine members remained split on whether interest rates should start rising, but that it seems probable that the chances of a rate hike in the immediate future have continued to fall.

The committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375bn and to reinvest the £4.35bn of cash flows connected to the redemption of the January 2015 gilt held in the asset purchase facility.

“Since last August, past meetings have seen two MPC members, Martin Weale and Ian McCafferty, voting to hike interest rates by 0.25% from their current record low of 0.5%. However, the dataflow in terms of economic growth has disappointed in recent months, with the PMI surveys for example signalling a slowdown in the rate of GDP growth from 0.7% to 0.5% in the fourth quarter," said Markit chief economist Chris Williamson.

“The hawks are therefore likely to have remained very much in the minority. That’s not to say there is not a case for raising interest rates: even with the recent fall in the PMI surveys, growth remained above its long-run average in December.

"There is also a case for policymakers to ‘look though’ the recent drop in inflation if it is caused by lower oil prices, just as higher inflation due to oil price rises has been looked through in the past. With wage growth showing signs of reviving, there is some evidence of underlying inflationary forces picking up."

Williamson said that a muted wage growth and the slowdown in the economy towards the end of last year, coupled with worrying signs of economic stagnation and political instability in the Eurozone are all likely to have contributed to the bank's decision.

"Rates look unlikely to start rising until the second half of the year, and could even be delayed until 2016 if the economic data deteriorate further in coming months,” he said on Thursday.