MPC keeps policy unchanged, as expected

The Monetary Policy Committee kept its main policy rate and the size of its asset purchase facility unchanged at 0.50% and £375bn, respectively, as economists had expected.

MPC members voted eight to one to keep rates steady, the minutes showed, which was also as expected.

Ian McCafferty was again the lone dissenter, favouring a 25 basis point hike in Bank Rate instead.

Rate-setters were unanimous in their decision to keep the size of APF steady.

Inflation at the consumer level was expected to rise as drops in the prices for energy and food steadily dropped out of the calculations for the consumer price index, the Bank of England explained in a statement.

However, 'core' CPI - the more meaningful gauge of prices - was "subdued" and even the headline rate of CPI was expected to remain below 1% until the back half of 2016, which was well away from the Bank's inflation target of 2%.

The outlook for the domestic economy was little changed from the forecasts contained in the Bank's November Inflation Report, with "robust growth in private domestic spending continuing to counter-balance subdued demand growth overseas".

"All members agree that, given the likely persistence of the headwinds weighing on the economy, when Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles. This guidance is an expectation, not a promise. The actual path Bank Rate will follow over the next few years will depend on the economic circumstance," the BoE added.

As of 12:20 the pound was 0.28% weaker versus the US dollar at 1.5138.

The yield on the benchmark ten-year Gilt was slipping three basis points to 1.85%.