The Bank of England Monetary Policy Committee has announced that they will be holding interest rates at the all-time low of 0.1%.
The Bank published its highest inflation forecast in 10 years, in which they predict inflation will reach around 5% by next spring, adding that rises in interest rates will likely be needed within the next coming months. Many anticipated that the BoE would raise the rates to 0.25%, but it seems they will hold off the rate increase for a while longer.
The value of the Sterling fell around 1.5% to $1.352 (GBPUSD=X) after the annoucement.
Ben Broadbent, the deputy governor in monetary policy for the Bank of England, said rates were unlikely to stay constant at 0.1% in order to meet the government’s inflation target of 2%.
The decision of the MPC to hold interest rates at 0.1% was not unanimous, however. Two members of the committee wished to increase rates to 0.25% while another three wanted quantitative easing of assets halted.
The Governor of the Bank of England Andrew Bailey said that he does not expect inflation to fall below 3% until Spring 2023.