The votes are in – are interest rates set to rise?

The Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to keep interest rates at the historically low 0.5%.

The final vote of 9 – 0 means that despite widespread belief the MPC would move closer to announcing rates rises, the move has been prevented for the near future.

According to the minutes of the meeting, some members felt that the economy was more balanced than in May, meaning that though there will be no imminent rates rise, that they are increasingly satisfied that the economy is reaching a point where rates can rise.

The minutes said: “The economy was starting to return to normal. Part of that normalisation would be a rise in Bank Rate at some point. The precise timing of the rise would depend on the outlook for inflation. That, in turn, would depend on the data flow, and in particular what that implied for the degree of slack, the prospects for its absorption, and the broader outlook for wages.

“For some members, the policy decision had become more balanced in the past couple of months than earlier in the year. In terms of the immediate policy decision, however, all members agreed that, in the absence of other inflationary pressures, it would be necessary to see more evidence of slack being absorbed before an increase in Bank Rate would be warranted.”

The minutes also show that during the meeting it emerged that the MPC was “surprised” that the market didn’t hold a widespread belief that rates would rise this year.

You can read the full minutes from today’s meeting here.

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