BOE Key Rate Steady at 0.5%

Bank of England’s key interest rate remained steady at 0.5 percent according to the announcement made on  Thursday after the regular meeting, while UK inflation can be seen at a 14-month low.

The policymakers of the central bank voted 6-3 to maintain the rate, the result was lower compared the 7-2 in the previous round. This indicates that the BOE may increase borrowing costs on the next meeting scheduled in August, this coincides with the analysts’ projections.

While during its meeting for this month, the BOE had a unanimous vote to hold the quantitative easing stimulus policy which raises 445 billion ($586 billion, 506 billion euros) within the British economy.

Nevertheless, the sterling pound rallied against its American counterpart due to the increased chance for a rate hike before summer ends. According to the minutes of the two-day meeting ended on Wednesday, the central bank stated that British inflation is predicted to increase slightly than forecast. It further reflects on higher dollar oil prices and sluggish pound rate.

Also, the UK economy grew at its slowest pace in more than five years while the gross domestic product came in at 0.1 percent in Q1 this year. After the Brexit referendum in June 2016, the BOE immediately reduced its main interest rate by a quarter point of 0.25 percent. This also boosts borrowing cost to 0.5 percent to cut down inflation.