Bank voted 9-0 to hold rates and QE programme

Minutes of the Bank of England’s March meeting have been released today and have revealed that the Monetary Policy Committee (MPC) voted unanimously earlier this month to keep interest rates at the historic low of 0.5%.

Furthermore, all nine members of the MPC opted to keep the quantitative easing (QE) on hold.

QE, also known as printing money, is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital.

Interest rates have stood at the record low since March 2009, when the Bank also embarked on its QE programme. At the time, the economy was in the midst of its worst recession in more than five decades.

Meanwhile, the minutes revealed that some policy members are showing concern that inflation might not fall as quickly as they had anticipated.

Consequently, this will lead economists to believe that interest rates may go up sooner than expected.

The minutes said: “Members drew different inferences about how the balance of risks to inflation was evolving. Some members considered that the upside risks to inflation had increased slightly over the month; others felt that the balance of risks had not changed materially.”

Last month, the Office for National Statistics announced Consumer Price Inflation (CPI) rose to a 14-month high of 3.5% in January.

The rise in inflation has been driven by higher petrol costs and the effects of the reduction in the standard rate of VAT.

According to the minutes, the MPC believes that it “was increasingly likely” that CPI inflation will “remain well above” the target over the months ahead.

It added the MPC would keep under “close review the extent to which these shocks to the price level were feeding through into inflation expectations”.

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