Bank of EnglandThe first UK interest rate rise in more than five years remains a distant prospect, as the Bank of England voted to keep monetary policy on hold for another month.

The bank’s Monetary Policy Committee decided to keep rates at their record low of 0.5 per cent and the stock of assets bought under the quantitative easing policy unchanged at £375bn.

The BoE also said it would reinvest the £4.35bn of cash flows associated with the redemption of the January 2015 gilt.
Despite the continuing strength of the UK’s economic recovery and signs that wages may at last be edging ahead of inflation, most City economists are not expecting rates to rise until at least the autumn, and possibly not until early next year.

Phillip Shaw, economist at Investec, said that for most MPC members “a rate hike at this stage is not a serious policy option.”
“We are set to remain in a period of steady rates at all-time lows until data on economic momentum and pay growth begin to hint at inflation pressures building and becoming entrenched in expectations, and we are not there yet,” he added.

Data earlier on Thursday from Halifax that showed the slowest rate of house price increases in 11 months, confirmed that the housing market, which had been a source of concern for policy makers, was no longer accelerating.

Despite a run of slightly disappointing data releases, results from the British Chambers of Commerce quarterly survey suggest that the economy continues to grow strongly, with the key readings for activity, orders and investment intentions all strengthened.