LONDON—The Bank of England voted to keep interest rates at their record low of 0.5 percent on Thursday and cut its forecasts as a slowdown in global growth and market volatility cast uncertainty over the country’s outlook.
The unanimous vote on the nine-member Monetary Policy Committee on Thursday reinforces investors’ expectations that the bank will not be able to raise interest rates as soon as it had expected until recently. Some believe it may have to cut rates instead.
“Global growth has fallen back further over the past three months, as emerging economies have generally continued to slow and as the U.S. economy has grown by less than expected,” the policy committee said in a statement. “There have also been considerable falls in the prices of risky assets and another significant fall in oil prices.”
With inflation at 0.2 percent — far below the 2 percent target rate — there’s little pressure to raise rates. Some observers have suggested the bank might consider lowering rates, following in Japan’s footsteps.
In its quarterly update to economic forecasts — published alongside the policy decision and the minutes to the meeting — the Bank of England downgraded its growth forecasts. The report included a discussion on the global economy, the recent upheaval in the financial markets and the government’s steps to hold a referendum on whether Britain should remain in the European Union.
The bank cut its growth forecasts for the next three years to 2.2 percent in 2016, 2.4 percent in 2017 and 2.5 percent in 2018.
In the November report, it had predicted growth at 2.5 percent in 2016, 2.7 percent in 2017 and 2.6 percent in 2018.