The Bank of England's rate-setting committee voted 8-1 to keep interest rates at their record low for another month in October, as a rate rise before mid-2016 looks increasingly less likely.
With some disappointing data on the U.K. economy, the continuing threat of low inflation or deflation, and market turmoil elsewhere continuing, there was little impetus for the Bank's Monetary Policy Committee to move on interest rates for the first time in six and a half years.
Ian McCafferty, who for months has been the committee's most hawkish member, remained the sole member of the committee voting for an increase in interest rates.
Sub-1 percent inflation, which is below the target set for the MPC, is likely to be a feature of the U.K. economy until at least spring 2016, the committee admitted. CPI inflation is now forecast to stay close to zero for the rest of the year by the committee. This is likely to delay the moment it first raises interest rates.
Economists and stock market traders increasingly believe that the bank will hold rates for longer than previously thought, especially since the U.S. Federal Reserve delayed a once much-anticipated rate rise in September. Bank of America Merrill Lynch economists this week put off their forecast for a U.K. rate rise until May 2016, instead of their previous prediction of February.
Some MPC members cited evidence that inflation isresponding more quickly to interest rate changes than previously thought.