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Bank Of England Maintains Interest Rates At 0.25% In The Most Split Vote In 6 Years

Bank Of England Maintains Interest Rates At 0.25% In The Most Split Vote In 6 Years

The British pound spiked higher early Thursday morning after the central bank members were split on how to proceed with its key interest rates. The British pound was trading just below the $1.2700 level but the interest rate decision sent the currency to the $1.2788 level but has since declined below the $1.274 level.

Five members of the Bank of England voted to maintain its key interest rate at 0.25 percent while three members voted against such a move and called for an immediate hike to 0.5 percent, Bloomberg reported. In fact, Thursday's interest rate decision vote had the biggest division in six years as expectations were calling for a 7–1 outcome in favor of keeping rates unchanged.

The Bank of England also said it expects inflation to read above 3 percent in the coming months, which is above its prior forecasts of 2 percent. The unemployment rate read 4.6 percent while average earnings grew just 1.7 percent.

Members who voted to keep the interest rates unchanged felt this would be the prudent move to support economic growth in face of rising prices and poor wage growth. On the other hand, the three members who voted for a rise in rates were likely focusing on the inflation rate and felt that low unemployment will turn into wage growth through a rate hike, Bank of America's Rob Wood told Bloomberg.

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