Ian McCafferty voted against committee consensus by recommending an interest rate rise of 25 basis points. It is his view that the trajectory of domestic costs are more likely to lead to inflation exceeding the Bank’s target of 2% in the medium term than the committee had forecast in its November projections.
All members echoed their previous sentiment that when rates did begin to rise they would do so at a gradual pace and a lower level than in previous interest rate cycles.
Inflation remained in negative territory in October at 0.1% marking the third time this year that inflation, measured by the Consumer Price Index, had dropped below 0%.
Barry Naisbitt, chief economist, Santander UK, said the decision had come as no surprise.
“With inflation still slightly negative and uncertainties about global economic prospects continuing to be a feature of economic debate, the MPC was unlikely to change the decision taken last month.
“The positive news from recent activity indicators hints that the slowing in quarterly GDP growth seen in the third quarter, to 0.5% from 0.7% in the second quarter, might reverse in the final quarter of the year. However, MPC members are likely to want to see more evidence on trends in the labour market, inflation and growth, as well as the outcome of the US Federal Reserve’s decision on interest rates later this month before considering any change in policy.”
The committee voted unanimously to maintain its stock of purchased assets under its quantitative easing programme at £375bn.