BoE voted unanimously to keep interest rates and asset purchase programme unchanged

The BoE on 8 January decided to maintain benchmark interest rates at 0.5% and the asset purchase programme at £375bn.

The unanimous vote came as a surprise as Martin Weale and Ian McCafferty dropped their call for immediate rise of interest rates amid low inflation, dragged by falling oil prices. The two policymakers have consistently voted for a 25 basis point increase from 0.50% to 0.75% from August through to December.

"For the two members who had voted in the previous month for an increase in Bank Rate, the decision this month was finely balanced," the minutes said. "They believed that the sharp fall in inflation to below the 2% target was probably driven largely by temporary factors and was unlikely materially to affect the behaviour of households and businesses in such a way that it became self-perpetuating."

Backing the argument to hold on rates, the minutes added that there had been a pick-up in volatility in some asset prices, partly reflecting greater political uncertainty associated with elections in Greece, more evidence of very low global inflation, and the consequences of further falls in oil prices.

At the time of the policy decision the spot price of Brent crude oil had fallen to $50 per barrel, down $20 on the month and $32 lower than at the time of the November Inflation Report.

The BoE said new estimates of UK economic activity suggested that growth was proceeding at a steady pace, rather than slowing from an above-trend rate as had previously seemed likely.

The third estimate of gross domestic product (GDP) growth in 2014 third quarter, at 0.7% was unrevised, the BoE pointed out. However, downward revisions to earlier quarters had led to fourth-quarter GDP growth being revised down from 3% to 2.6%.

Markit chief economist Chris Williamson said: “There’s still an outside chance for rates to rise later this year, but it would require wage growth to continue to revive and for policymakers to see clear evidence that falling oil prices are driving a substantial upturn in consumer spending, as well as a significant improvement in the Eurozone economy."

The pound fell 0.20% to $1.5115 following the news.