The Bank of England held its main interest rate steady Thursday amid signs the U.K. economy is slowing.
Continue Reading Below
The U.K. central bank said in a statement that its nine-member Monetary Policy Committee left its benchmark rate at 0.5% and the size of its bond portfolio unchanged at GBP375 billion ($599 billion) following its two-day meeting.
The minutes of officials' deliberations over the decision to leave rates unchanged, which had been broadly expected, will be published Nov. 19.
The U.K. has been among the fastest-growing advanced economies this year but recent data suggest its pace is slackening.
Output growth slowed to an annualized rate of 2.8% in the third quarter from 3.7% in the second, according to official data published last month. And surveys of manufacturing and services firms published this week suggest the economy is feeling a chill from the neighboring eurozone, where policy makers are battling sinking prices and feeble growth.
Investors were for months expecting the central bank to start raising U.K. borrowing costs in the first quarter of 2015 after more than a year of rapid growth and tumbling unemployment. But in recent weeks expectations of an early-2015 rise have diminished.
Continue Reading Below
Senior officials including Chief Economist Andrew Haldane and Deputy Governor Jon Cunliffe have in recent speeches signaled they are unlikely to vote for rate increases any time soon given a darkening outlook for U.K. and global growth.
And like other central banks, the BOE is also grappling with surprisingly weak inflation, which has been dragged down by falling commodity prices world-wide and lackluster wage growth at home. Annual inflation was below the BOE's 2% target at 1.2% in September and economists say it could dip further this year.
Investors now expect the first rate rise to come around the third quarter instead, according to overnight lending rates that hug the BOE's benchmark.
BOE officials are due to publish their latest quarterly forecasts Wednesday, which will offer investors fresh clues on the possible timing of the first rate hike. Analysts at UBS said in a report earlier this week that they expect officials to cut their forecasts for economic growth and near-term inflation.