Bank of England released it policy meeting minutes from the August 3 and 4 meeting. Results of the Monetary Policy Committee vote on interest rates show that policy makers voted unanimously to hold the key rate at a record-low 0.5 percent.
All nine members voted, including Spencer Dale and Martin Weale who has in the past pushed for an increase in rates. Their change of mind comes as Britain’s recovery shows increased signs of faltering and the outlook for the economy looks grim.
The BOE minutes stated that “Some members considered whether there was a case for increasing” the bond plan, though they concluded that the case “was not yet strong enough,”
“Recent developments had weakened the case for removing some of the monetary stimulus,” the minutes said. “There remained substantial risks to inflation in the medium term in both directions. But overall the news on the month had increased the downside risks.”
The markets do not expect the BOE to increase rates until mid 2012.
After the release of the policy meeting minutes at 08:30 GMT, the pound fell against the dollar by over 70 pips. Its fall was exacerbated by simultaneous release of unemployment and jobless claims data which both increased in July.
GBPUSD fell from pre-news 1.6418 to 1.6347 within two minutes.