The Monetary Policy Committe voted 8-1 to hold the key lending rate and the Asset Purchase Program unchanged at Stg 375 Bio. MPC Member, Ian McCafferty was the single dissenter who voted for an increase of 0.75% citing the risk to inflation stemmed from stronger demand and pay growth and a smaller than estimated degree of spare capacity justifies the rate increase.
The BOE MPC officials also cut their outlook for UK inflation for the rest of the year who saw upside to medium term risks in its quarterly inflation report. The officials said the near-term inflation outlook is subdued and the recent decline in energy prices will bear down until mid-2016. The BOE also predicts that the UK economy will grow 2.8% in 2015, higher than previously anticipated and 2.6% in 2016.
Chart: WorldWideMarkets Alpha Trader