The Bank of England's Monetary Policy Committee (MPC) released its October meeting minutes on Thursday. 8 members voted to keep the central bank's monetary policy unchanged. Ian McCafferty voted to hike interest rate by 0.25%.
The consumer price inflation in the U.K. was zero in August, below the central bank's 2% target. The BoE noted that the low inflation was mainly driven by lower prices for energy, food and other imported goods prices.
"With inflation below the target, and the likelihood that at least some spare capacity remains in the economy, the MPC intends to set monetary policy so as to ensure that growth is sufficient to absorb any remaining underutilised resources. That will support domestic cost growth and is necessary to ensure that inflation is on track to return sustainably to the 2% target rate within two years," the minutes said.
The central bank said that a deterioration in the global economy would have a negative effect on the U.K. economy.
"That could occur, for example, were the slowdown currently underway in a range of emerging economies, including China, to intensify," the minutes said.
MPC members pointed out that the interest rate hike will be gradual when the Bank of England starts to raise its interest rate, adding that the decision will depend on the incoming economic data.