The Bank of England held fire on delivering a post-Brexit vote boost for the economy as it kept interest rates on hold once more, but signalled that a cut may be on the cards next month.
Minutes of the highly-anticipated decision by the Monetary Policy Committee (MPC) showed members voted 8-1 to leave rates at 0.5%, where they have been since March 2009.
One member – Gertjan Vlieghe – voted for an immediate cut to 0.25% amid signs that the EU referendum decision was already hitting parts of the economy, with growth set to come under further pressure.
But the minutes of the MPC meeting showed the economy had been resilient in the run-up to the vote, with the Bank now expecting second-quarter growth to pick up to around 0.5%, from 0.4% in the previous three months.
Most policymakers wanted to wait until the Bank’s quarterly forecasts on August 4 before taking further action as banks and financial markets have also held up surprisingly well since the vote.
Consumers may yet be in line for a further reduction in borrowing costs, though, with the minutes confirming “most members of the Committee expected monetary policy to be loosened in August”.
Bank governor Mark Carney has already said that, in his personal view, a rate cut was likely over the summer and has hinted at the possibility of firing up the printing presses to deliver more quantitative easing (QE) to shore up the economy.
All nine members of the MPC voted to keep QE on hold at £375 billion this month, but the minutes showed rate-setters are looking at “various possible packages of measures”.
“The exact extent of any additional stimulus would be based on the Committee’s updated forecast,” the Bank said.