- Kieran Davies, Barclays chief economist for Australia
The Bank of England kept interest rates at record lows, pointing to lower oil prices and weak wage growth, which is likely to keep a lid on inflation for some time to come. The nine-member Monetary Policy Committee voted eight to one to leave the main interest rate at 0.5%, where it has been since 2009. Policy makers voted unanimously to maintain the size of the BoE's bond portfolio at 375 billion pounds. For the majority officials, the outlook for growth and inflation in Britain does not yet justify a hike in the BoE's benchmark rate. Consumer inflation dropped 0.1% on the year in October and the gauge is expected to stay below the central bank's target of 2% throughout 2016. Investors expect the BoE to raise interest rates late next year or early 2017.
Meanwhile, a separate report showed the UK's trade deficit widened sharply in October as imports rose. In the three months to October, the total trade shortfall increased to £8.4bn. More broadly, the import of goods jumped from £2.3bn to £35.4bnon month in October. At the same time, exports of goods decreased by £700m to £23.5bn, with many firms blaming a strong Sterling for a loss of competitive advantage.
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