Bank of England holds rates for a record 84th month

The Bank of England has voted to keep interest rates on hold once again in its March meeting — as analysts had expected.

The BoE has been on hold as far as interest rates are concerned since March 2009, when the monetary policy committee cut Bank Rate to 0.5%. It’s now stood at 0.5% for a record 84 months.

Once again all nine members of the MPC voted to keep rates as they were. It’s the second consecutive unanimous vote.

In February, the MPC’s sole hawk Ian McCafferty, who had previously voted for a 0.25% rise, changed his position on deflationary risks caused by the falling price of oil, and voted to hold rates.

Market expectations are now pricing a rate hike increasingly far in the future, with some analysts even expecting a cut in the bank’s base rate before a hike.

Here’s the key quote from the Bank (emphasis ours):

At its meeting ending on 16 March, the MPC judged it appropriate to leave the stance of monetary policy unchanged. The MPC’s best collective judgement is that it is more likely than not that Bank Rate will need to increase over the forecast period to ensure inflation returns to the target in a sustainable fashion.

All members agree that, given the likely persistence of the headwinds weighing on the economy, when Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles. This guidance is an expectation, not a promise. The actual path Bank Rate will follow over the next few years will depend on the economic circumstances.

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