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Bank of England votes 8-1 to keep UK rates at 0.5% Bank of England votes 8-1 to keep UK rates at 0.5%
(34 minutes later)
The Bank of England has voted 8-1 to keep interest rates on hold at 0.5%.The Bank of England has voted 8-1 to keep interest rates on hold at 0.5%.
For the second month, Ian McCafferty was the only one of its Monetary Policy Committee (MPC) members to vote for an increase. The bank also lowered its estimate for the UK's economic growth in the third quarter of this year from 0.7% down to 0.6%.
For the second month, Ian McCafferty was the only one of its Monetary Policy Committee (MPC) members to vote for an increase in rates.
Policy makers also said that the risks from the slowing Chinese economy had increased since August.Policy makers also said that the risks from the slowing Chinese economy had increased since August.
In its summary, the committee said: "Developments since then have increased the risks to prospects in China, as well as to other emerging economies."In its summary, the committee said: "Developments since then have increased the risks to prospects in China, as well as to other emerging economies."
It added: "Global developments do not as yet appear sufficient to alter materially the central outlook described in the August Report, but the greater downside risks to the global environment merit close monitoring for any impact on domestic economic activity."It added: "Global developments do not as yet appear sufficient to alter materially the central outlook described in the August Report, but the greater downside risks to the global environment merit close monitoring for any impact on domestic economic activity."
However the MPC remained optimistic about the UK economy, despite poor figures on the UK's exports and manufacturing on Wednesday. It said that the reason for reducing its UK growth forecast had been the latest run of poor manufacturing and industrial production figures.
Cost pressures
Despite this, the MPC remained optimistic about the UK economy.
It said: "Domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence.It said: "Domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence.
"The rate of unemployment has fallen by over two percentage points since the middle of 2013, although that decline has levelled off more recently.""The rate of unemployment has fallen by over two percentage points since the middle of 2013, although that decline has levelled off more recently."
The bank said Mr McCafferty alone of the nine-strong MPC had wanted to increase Bank Rate by 0.25%. The bank said Mr McCafferty alone of the nine-strong MPC had wanted to increase the main interest rate by 0.25%.
It said he believed that building domestic cost pressures would otherwise be likely to lead to inflation overshooting the target in the medium term. It said he believed that costs were likely to go up in the UK and lead to inflation overshooting the bank's target.
The bank said that interest rate rises, when they did come, would be slow.
"All members agree that, given the likely persistence of the headwinds weighing on the economy, when Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles," the statement said.
"This guidance is an expectation, not a promise."