Investing.com – As expected, the Bank of England (BoE) decided on Thursday to leave interest rates on hold.
Specifically, the BoE left the benchmark interest rate at 0.50%.
The decision to hike interest rates was unanimous with all nine members voting in favor.
Last month, the vote was split as seven policymakers voted to hike to 0.5%, but two deputy governors -Jon Cunliffe and Sir Dave Ramsden- wanted to leave rates on hold at just 0.25%.
Furthermore, all MPC members agreed unanimously to leave its asset purchase program unchanged as expected at £435 billion ($583.6 billion) as well as to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion ($13.4 billion).
The minutes from the meeting showed commented that recent news in the macroeconomic data has been mixed and relatively limited.
While global growth has remained strong, the BoE noted that, “domestically, some activity indicators suggest GDP growth in Q4 might be slightly softer than in Q3.”
The minutes also suggested that the labor market remains tight and the BoE expects that will continue.
“Although it is too early to arrive at a comprehensive view of the effect of November’s rise in Bank Rate on the economy, the impact on interest rates faced by households and firms has been consistent with previous experience,” the minutes explained.
After recent data showed inflation increased to 3.1% in November, the Monetary Policy Committee (MPC) stated that “inflation is likely to be close to its peak, and will decline towards the 2% target in the medium term”.
Commenting on the UK’s withdrawal from the European Union (EU), the BoE noted that Brexit “remains the most significant influence on, and source of uncertainty about, the economic outlook”.
The minutes further showed that the Committee remains of the view that, were the economy to follow the path expected in the November Inflation Report, "further modest increases in Bank Rate would be warranted over the next few years, in order to return inflation sustainably to the target".
"Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent," the minutes clarified.
Following the announcement, the pound weakened. GBP/USD traded at 1.3423 from around 1.3449 ahead of the publication, EUR/GBP was at 0.8814 from 0.8797 earlier, while GBP/JPY traded at 151.24 compared to 151.51 before the announcement.
Meanwhile, European stock markets traded mostly lower, paring losses seen ahead of the release. London’s FTSE 100 traded down 0.16%. The benchmark Euro Stoxx 50 lost 0.22%, France's CAC 40 slipped 0.07%, while Germany's DAX fell 0.50%.