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Divided BoE holds off on rate hike

The Bank of England (BoE) left interest rates and its asset purchase target unchanged on Thursday, despite growing calls by some members for a change in policy.

As expected, the bank decided to hold off on adding to the £375 billion ($628 billion) of asset purchases it has unleashed over previous years and kept its main benchmark rate at a record low of 0.5 percent.

Read MorePlateau time? UK growth seen stalling as BoE eyes hike

The U.K. pound fell to a session low after the news and has been trading at seven-month lows versus the dollar in recent trading sessions.

London.
Leonardo Patrizi | E+ | Getty Images
London.

Despite not announcing any change in policy, the "Old Lady of Threadneedle Street" is poised for action in the not-too-distant future. Two members of the central bank's rate-setting committee voted for an interest rate hike in August and many economists are anticipating an announcement at some point in the first half of 2015. The minutes of Thursday's meeting will be released on September 17 with market watchers having to wait until then to see if the split at the BoE has grown further.

Robert Wood, chief U.K. economist at Berenberg Bank, told CNBC that the minutes would be absolutely crucial and expected to see another split with two of the nine members opting for a hike. He personally expects the bank to move rates higher from record lows of 0.5 percent in February next year.

Read MorePoverty blamed for return of rickets and gout to UK

Whereas the European Central Bank is currently battling deflation in the euro, the Bank of England has had to contend with improving data and falling unemployment which has added to the speculation that a rate hike could be around the corner.

However, it's the depressed and "unprecedented" wage growth that has left BoE Governor Mark Carney with a headache, according to Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR). He told CNBC on Thursday that it should have now become a more important metric for the bank than employment.

"There's just no case for an interest rate hike right now," he told CNBC, revealing that most economists remain mystified as to why wage growth is so low. He believes that the numbers show that firms were happy to hire people but are not happy pay them more.

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