Fundamental Comment

BOE leaves rates, two members call for rate hike

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The Bank of England opted to leave both interest rates and amount purchase on hold at the last meeting this year.

The BOE left the official bank rate at 0.50 percent and the amount asset purchases at 435 billion pounds, where two MPC members had called for a rate hike.

Ian McCafferty and Michael Saunders voted to raising interest rates, but the other seven members to hold the borrowing cost.

As of 12:04 GMT, the pound traded higher at 1.4179 after hitting a peak of 1.4218 earlier in the session.

“All members agreed that any future increases in Bank Rate were likely to be at a gradual pace and to a limited extent,” BOE minutes said.

The two dissenting members stressed that the slack was used up and pay growth was picking, therefore a rate hike at the meantime would cut the risk of suffering from an above-target inflation that would need adjustments in policy.

However, the majority revealed that recent data had not showed any surprises and the May’s inflation report would provide full “assessment of the underlying momentum in the economy, the degree of slack remaining and the extent of domestic inflationary pressures.”

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