LONDON (AP) – The likelihood that the Bank of England will raise interest rates in coming months receded on Thursday, after the bank cut its economic forecasts due to the slowdown in global growth and market turmoil.
The Bank of England’s nine-member Monetary Policy Committee unanimously voted to keep the key interest rate at its record low of 0.5 percent. While in previous months one member had voted for an increase, the unanimous vote indicates greater concerns about the effects on the U.K. of the recent slowdown in the global economy.
“This is one of the most open economies in the world,” Carney said at a press conference. “It has the leading global financial center housed in it. So international factors, the trajectory of the global economy, global financial conditions, are very important in the U.K. The deterioration in the global outlook has had an impact on our forecast.”
With inflation at 0.2 percent – far below the 2 percent target rate – there’s little pressure to raise rates. Some observers have suggested the bank might consider lowering rates, following in Japan’s footsteps.
Carney brushed aside such questions, reiterating that rates were much more likely to be raised than cut.