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| Pound falls after Bank of England minutes released | |
| (35 minutes later) | |
| The pound has fallen after the majority of the Bank of England's Monetary Policy Committee (MPC) remained against raising interest rates, according to minutes from the October meeting. | |
| The minutes said that for most members, there was "insufficient evidence" of inflationary pressure to raise rates. | |
| MPC members voted 7-2 to keep interest rates at a record low of 0.5%. | |
| The pound fell about half a cent against the dollar after the minutes were released. | |
| At one point it fell as low as $1.6016. | |
| Ian McCafferty and Martin Weale again voted to raise rates to 0.75%, the third month in a row they have done so. | |
| "Given the deterioration we have seen in economic conditions, it is perhaps surprising they didn't cross the fence and join the majority voting to hold rates at 0.5%," said Ben Brettell, senior economist at Hargreaves Lansdown. | "Given the deterioration we have seen in economic conditions, it is perhaps surprising they didn't cross the fence and join the majority voting to hold rates at 0.5%," said Ben Brettell, senior economist at Hargreaves Lansdown. |
| "I can't see the logic in voting for higher rates at present. I expect them [interest rates] to remain on hold until mid-2015 at the very earliest, and possibly not rise until much later in the year," he added. | "I can't see the logic in voting for higher rates at present. I expect them [interest rates] to remain on hold until mid-2015 at the very earliest, and possibly not rise until much later in the year," he added. |
| Members of the MPC would have seen the latest UK inflation data, which showed that in September, inflation fell to a five-year low of 1.2%. | Members of the MPC would have seen the latest UK inflation data, which showed that in September, inflation fell to a five-year low of 1.2%. |
| That rate - as measured by the Consumer Prices Index - is the lowest since September 2009, when it was 1.1%. | That rate - as measured by the Consumer Prices Index - is the lowest since September 2009, when it was 1.1%. |
| Interest rates have been unchanged since March 2009. | Interest rates have been unchanged since March 2009. |
| Gloomy outlook | Gloomy outlook |
| Last week, the chief economist at the Bank of England, Andrew Haldane, said interest rates should remain low to avoid long-term economic stagnation. | Last week, the chief economist at the Bank of England, Andrew Haldane, said interest rates should remain low to avoid long-term economic stagnation. |
| In a speech he was downbeat over prospects for the UK economy because of weaker global growth, low wage growth and financial and political risks. | |
| "Put in rather plainer English, I am gloomier," Mr Haldane told local business leaders in Kenilworth, Warwickshire. | "Put in rather plainer English, I am gloomier," Mr Haldane told local business leaders in Kenilworth, Warwickshire. |
| "This implies interest rates could remain lower for longer, certainly than I had expected three months ago." | "This implies interest rates could remain lower for longer, certainly than I had expected three months ago." |
| In a research note David Tinsley, an economist at UBS, said that Mr Haldane was a bit more pessimistic than other members of the MPC. | |
| "Overall, the minutes shift the recent MPC discussion a little, in highlighting the downside risks on activity, and the downside news on inflation. | |
| "They do not go quite as far as Andy Haldane (Bank Chief Economist) went in the week in calling the outlook 'gloomier'," Mr Tinsley said. | |
| UBS does not expect an interest rate rise until August next year. |