Bank of England holds interest rate at 0.50%

The Bank of England's main task is to use monetary policy as a tool to try and keep 12-month inflation close to a government set target of 2.0 per cent.
The Bank of England's main task is to use monetary policy as a tool to try and keep 12-month inflation close to a government set target of 2.0 per cent.PHOTO: AFP

LONDON (AFP) - The Bank of England on Thursday said it had voted to leave its main interest rate at a record-low 0.50 percent in the face of zero inflation.

The nine-member Monetary Policy Committee also maintained the central bank's level of cash stimulus pumping around the British economy at £375 billion ($583 billion, 534 billion euros).

The MPC "voted by a majority of 8-1 to maintain Bank Rate at 0.5 percent", the BoE said in minutes published following a regular monthly policy meeting.

It was the first time that the central bank has published minutes immediately after the meeting in a switch made by BoE governor and Canadian national Mark Carney that is aimed at providing more transparency.

"The near-term outlook for inflation is muted," the minutes said.

"The falls in energy prices of the past few months will continue to bear down on inflation at least until the middle of next year," they added.

Britain's annual inflation rate turned flat in June from the previous month on the back of also falling clothing and food prices, recent official data showed.

But Mr Carney has predicted that the time for an interest rate hike is moving closer.

The BoE's main task is to use monetary policy as a tool to try and keep 12-month inflation close to a government set target of 2.0 per cent.