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BoE votes to hold interest rates at historic low

The Bank of England monetary policy committee has kept interest rates at a historic low of 0.5% with little sign of any urgency to increase the cost of borrowing. It voted eight to one against raising rates, concluding that price pressures had not changed much since August and that falling oil prices offset emerging evidence of higher levels of core inflation. Minutes released yesterday said increased risks to the global economy and a subdued outlook for inflation had not materially changed prospects for the economy. The minutes showed that events in China, where crashing share prices and a devaluation of the yuan unleashed shockwaves across global financial markets last month, were the main focus of the MPC's decision. MPC members said the developments in China 'have the potential to add to the global headwinds to UK growth and inflation. The final vote was unanimous for leaving the £375bn quantitative easing programme unchanged. Most economists expect the Bank to begin raising interest rates in the first quarter of next year, although markets are not pricing in a rise until the third quarter.


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