United call to keep rates on hold

Bank of England policy­makers appear more united in their determination to keep a lid on interest rates as they reflect on lower inflation and falling oil prices.

Ian McCafferty and Martin Weale, pictured, had argued for rate rise

Minutes of the December meeting of the central bank’s monetary policy committee – published yesterday – showed that the majority of members thought the weak outlook for inflation ­warranted keeping rates on hold at their record low of 0.5 per cent.

Ian McCafferty and Martin Weale, who have voted for a rate increase since August, continued to argue that below target ­inflation was largely the result of a higher exchange rate and lower raw material prices.

Policymakers noted that oil prices had fallen much more sharply than they had expected, meaning consumer inflation – currently at 1 per cent – was likely to remain lower than ­previously thought in the short term.

The minutes showed that different members saw different risks, but they did not repeat November’s language of there being a “material spread of views”, which had caused analysts to believe that some policy­makers were edging closer ­towards raising rates.

IHS Global Insight economist Howard Archer said: “The December minutes are likely to ­reinforce the belief that the Bank will not be raising rates before late-2015, and could very well wait until 2016.”

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