MPC keeps rates unchanged, as expected

Rate setters in Britain kept policy unchanged following their latest deliberations, as had been widely expected.

Monetary Policy Committee member Ian McCafferty stuck to his hawkish stance, voting again for an immediate 25 basis point hike in Bank Rate.

Given recent volatility in global markets some analysts had broached the possibility that he might have changed his colours.

Bank Rate was maintained at 0.50% by eight votes in favour to one against.

Likewise, the size of the Bank’s asset purchase facility was kept at £375bn.

Despite the recent sharp drop in energy quotes, the Bank forecast twelve-month inflation would in fact rise modestly in the months ahead, albeit in a more gradual manner in the near-term than it projected in the November Inflation Report.

"Although the most recent declines in oil prices will depress global inflation in the near term, given they appear primarily to reflect developments on the supply side of the market, these conditions should in time provide net support to spending in the United Kingdom and its major trading partners," the BoE said.

In its policy statement the MPC also emphasised that it not only aims to return consumer price inflation to its 2% target in the medium-term, but to do in a sustainable manner.

Private domestic spending was described by the MPC as "healthy", although business surveys were implying the near-term outlook for aggregate activity was slightly weaker than the MPC's central forecast in November.

As of 12:28 GMT cable was drifting lower by 0.13% to 1.4416 as euro/gbp gained 0.22% to 0.7572.

-- More to follow --