Bank votes to hold base rate by 8-1

"There is a clear case for tighter monetary policy in the UK".

THE Bank of England has voted to keep its main interest rate at a record-low 0.25 percent despite concerns over rising inflation, the central bank said yesterday after a regular meeting.

The Bank's Monetary Policy Committee voted by 8-1 to keep rates at their ultra-low level.

The climb of the GBP/USD Forex pair this week was mainly driven by weakness in the dollar, which tumbled 1.15 percent on Wednesday after the U.S. Federal Reserve chose to raise interest rates to 1 percent. Policymakers expect inflation to exceed the 2% target "over the next month or so", with price growth to "exceed the target materially by the summer".

Consistent with prospects for stronger global growth, equity prices have generally risen internationally, and short and long-term interest rates have increased in some economies. It was down more than 1 percent overall for the week and as much as 1.5 percent since the Fed hiked rates on Wednesday.

The central bank opined in February that United Kingdom wage growth become less than the rate of inflation later this year, and at that point the real spending power of the United Kingdom consumer would weaken.

But Neil Wilson, senior market analyst at ETX Capital, says it was not just Forbes' dissenting voice that struck home, adding: "The minutes paint a picture of a committee moving a lot closer to hiking rates than markets had realised".

The Bank's Monetary Policy Committee was widely expected to leave both Bank Rate and its asset-purchase program unchanged, which it did.

It was the first time since July a year ago that the vote to maintain rates had not been unanimous.

But there were also signs that other MPC members might be considering voting for an increase.

Inflation is surging thanks largely to the slump in the pound since the Brexit vote, hitting 1.8% last month.

Banco BCI economist Antonio Moncado highlighted that in its post-meeting statement, the bank stuck mainly to pre-established facts.

However, the BOE believed that rising inflation driven by the large fall in the sterling exchange rate after the Brexit vote, from 1.48 US dollars to 1.22 USA dollars, would dampen consumer spending. Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target. Forbes supported a rate increase to 0.5 percent, and some of those in the majority said it wouldn't take much more strength in inflation or growth for them to also shift their view.

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