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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Interest rates to remain at 0 5

Article By: ,  Financial Analyst
August 6, 2015 6:36 PM

The UK's interest rates have been held at 0.5 per cent, following a vote by the Bank of England's Monetary Planning Committee (MPC).

Members of the MPC voted 8-1 to keep the rates flat – but this is the first time in months the group has not been unanimous in its decision. Ian McCafferty voted for an increase.

The latest Inflation Report from the Bank called the outlook for inflation "muted" and analysts believe this could mean that rises in interest rates could be delayed.

Lucy O'Carroll, chief economist at Aberdeen Asset Management, told the BBC: "Those analysts who predicted a rate rise this year may be on the brink of having to rip up their predictions."

Bank governor Mark Carney believes that a rise is "drawing closer". During a news conference, he explained that a rate increase could not be predicted in advance. He also said that the decision would be determined by looking at economic data such as wage growth, productivity and import figures.

The Bank of England has also said that it expects inflation to be back to its two per cent target within two years.

What's preventing inflation?

One current barrier to higher inflation is low oil prices and energy costs in general. The value of sterling has also risen around 3.5 per cent since May.

When rate increases do start again, Mr Carney says they will be gradual and "below past averages".

Commenting on the vote, John Longworth, director general of the British Chambers of Commerce agreed with the decision.

"It would have been imprudent to push through a rate rise at this moment when our economic recovery remains in need of care and encouragement," he said.

The MPC also voted – this time unanimously – to hold the UK's bond-buying programme at £375 billion.

Following the announcement, the pound dropped against other currencies. It fell by a cent against the dollar, before rallying slightly to $1.5511. It was also down by around one euro cent against the euro at €1.4218.

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