In a meeting that took place in early October the policy council for the Bank of England, the Monetary Policy Committee (MPC), voted by an overwhelming margin of 7 – 2 to keep interest rates at their current historic low of 0.5%.

The MPC said that with inflation at a five-year low of 1.2%, the market was not yet strong enough to warrant any increase in interest rates.

This slowdown in inflation increases is attributed to an uncertain global political and economic situation, though it does appear that the UK has suffered less than most of the Eurozone, where inflation is frequently as low as 0.3%.

Jonathan Pryor, head of FX dealing at Investec Corporate and Institutional Treasury, observes:

“While the latest minutes showed voting was unchanged at seven-to-two, there was evidence that economic unrest in the Eurozone is filtering through to the UK economy sooner than many thought.

“As we approach the vital third-quarter GDP release on Friday this is likely to keep sterling underpinned as the concerns around growth and an extended period of low inflation continue to bubble to the surface.”

Andrew Haldane, chief economist for the Bank of England, has said that he predicts interest rates to remain low for longer than expected.

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Word: Peter Cribley