MPC members hold Bank Rate in split vote

Jonathan Haskel and Michael Saunders voted to reduce interest rates to 0.50% for the third consecutive meeting.

In its minutes, the Committee cited slower GDP growth, reflecting weaker global growth and elevated Brexit uncertainties.

However, the MPC noted that recent indicators suggest that global growth has stabilised, reflecting the partial easing of trade tensions and the significant loosening of monetary policy by many central banks over the past year.

Members discussed a rise in global business confidence and receding near-term uncertainties facing businesses and households. In addition, surveys of business activity have picked up, investment intentions appear to have recovered, and housing market indicators have strengthened.

The MPC said that UK GDP growth is projected to pick up a little in early 2020, supported by a pickup in global activity, a further decline in Brexit uncertainties and the Government’s announced spending measures.

As a result, it noted that "if the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy may be needed to maintain inflation sustainably at the target".

Frances Haque, chief economist at Santander, commented: “The MPC’s decision to leave Bank Rate unchanged was a tight call this month, particularly given comments made in recent weeks by members.

“As such, all eyes were on the economic data published last week, with January flash PMIs leading to stronger growth than expected with increases across both manufacturing and services. This, along with positive labour market data and buoyant survey data from RICS, Deloitte and CBI will all have helped to stay the hand of the MPC, at least for now until more economic data for the beginning of the year emerges.

“We now wait to see whether the bounce in confidence from the General Election continues to feed through to growth at the start of 2020.”