The Bank had been expected to keep policy unchanged in Mark Carney’s second meeting as governor, having last month issued guidance telling investors not to expect a rise in interest rates in the near future.
That statement said: “The implied rise in the expected future path of Bank rate was not warranted by the recent developments in the domestic economy.”
The change in that implied path, suggesting the UK base rate could rise in late 2014, had been triggered by signals the US Federal Reserve may slow down its own QE programme later this year.
No statement was issued alongside today’s policy decision, but Carney is expected to reveal further detail of his guidance plans when the BoE’s latest quarterly inflation report is released next week.
Meanwhile, the ECB, which announces its latest interest rate decision this afternoon, is also expected to hold policy.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “Although rates have been held for another month, the new Governor does seem to be signalling his future plans, which is refreshing and should allow for more stability in SWAP rates. Whilst short term expectation is that base rates will remain low, fixed rate pricing is unlikely to fall further, and any pressure is upwards.
“At Legal & General Mortgage Club, over 90% of our mortgage business is written on fixed rates, so now could be the right time to take advantage of these rates while they are still around.”
