The Bank of England (BoE) left interest rates at record lows on Thursday as it highlighted subdued inflation in the U.K. due to the recent fall in oil prices.
As expected, the bank decided to hold off on adding to the £375 billion ($569 billion) of asset purchases it has unleashed over previous years and kept its main benchmark rate at a record low of 0.5 percent. The decision tallied with a Reuters poll of economists who all predicted that the current rate would remain unchanged.
The bank’s monetary policy committee voted by a majority of 8-1 to maintain the bank rate, which again echoed a survey of economists by Reuters. In the minutes of this week’s meeting, the policy makers noted that the price of oil had “fallen markedly again,” which it said increased the likelihood that headline inflation rates would remain subdued. It also said that nominal wage growth had “leveled off.”
“Although the prices of oil and some other commodities had fallen markedly on the month, in large part that was thought likely to have reflected supply conditions rather than further negative news on global demand. The downside risks to growth in emerging market economies remained, however, with the risk of an acceleration of capital outflows in reaction to any increase in U.S. interest rates,” the bank’s minutes said.