At the Bank’s Monetary Policy Committee (MPC) meeting ending on 15 March 2017, the Committee voted by a majority of 8-1 to maintain Bank Rate at 0.25%.
The Committee also voted unanimously to continue with the programme of sterling non-financial investment-grade corporate bond purchases, totalling up to £10bn, and to maintain the stock of UK government bond purchases at £435bn.
Responding to the decision – which many expected despite yesterday’s rate rise in the US – Barry Naisbitt, chief economist at Santander, said: “It is clear that the economy grew at a robust pace in the second half of last year, and more rapidly than expected. As a consequence, the unemployment rate continued to fall and in January it reached 4.7%, the lowest rate since 1975.
“With the depreciation of sterling, inflation has started to rise and in January, at 1.8%, it reached its highest rate for over two years. With a clear expectation that inflation will rise further, there are concerns that higher inflation this year could reduce households’ real earnings growth.
“Taking a balance of views on this, the issue of whether ongoing uncertainty could restrain companies’ investment spending and other evidence into account, the MPC today decided to continue to hold Bank Rate at its historic low of 0.25%.”
Jeremy Duncombe, director at Legal & General Mortgage Club, added that the logic suggested the UK economy was not ready for a rate rise, especially with Article 50 just weeks away.
He said: “Today’s announcement from the Bank of England is good news for borrowers. Borrowers on an SVR could save themselves around £2,000 a year by switching to a better deal. They should speak to a mortgage broker to make sure they’re on the best possible deal for their circumstances – after all, these rates won’t be around forever.”