FXstreet.com (Barcelona) - The Bank of England approved by 8 votes to one to keep its Bank rate at the current 5.0% in the latest monetary policy meeting, with Davis Blanchflower in favour of a 25 basis points rate cut, according the minutes of the meeting.
Inflation, currently running at a 3.0% annual rate, was unanimously forecasted to rise even further in the coming months, fuelled by energy prices. Inflation, according to the Banks' estimations, will not moderate until energy and product prices stabilise. CPI is expected to return to the 2.0% level in two years time.
In the business domain, output growth has started to show signs of weakening, and some more moderation is likely, while domestic demand indicators are mixed, in one side, there have been seen improvements in financial markets, according to the Bank, although credit conditions have tightened.
The Bank's Monetary Policy Committee faces, in one side upward risks to the inflation outlook, and, on the downside, a sharp slowing of economy with real disposable income growth weakening and credit conditions turning harder, which should help to anchor inflation.