"The likely timing of the first bank rate increase is drawing closer. However, the exact timing of the first move cannot be predicted in advance; it will be the product of economic developments. In short, it will be data dependent."
-Mark Carney, BOE's Governor
The Bank of England said on "Super Thursday" that it remained on course to begin gradually raising interest rates in the UK early next year. BoE officials agreed to leave the central bank's benchmark interest rate at 0.5% and the size of its bond portfolio at £375 billion after this month's policy meeting. Minutes of BoE meeting, published along with the rate decision, revealed the decision was not unanimous, as Ian McCafferty voted for an immediate hike in the central bank's benchmark rate. McCafferty claimed a rate rise was necessary to keep inflation in check and to ensure that future rate lifts are smooth and gradual. In the BoE's quarterly inflation report forecasts showed that policy makers predict annual inflation to climb back to its 2% goal by the third quarter of 2017 provided that interest rates rise in line with expectations in financial markets.
While revising the inflation outlook, the growth forecast remained broadly unchanged, with median expectations for the annual GDP growth rate at 2.6%-2.7% throughout the coming quarters of 2015, while remaining just around a 2.5% annual growth rate within the whole of the forecast period, ending in the third quarter of 2018. The jobless rate forecast showed slightly higher unemployment rates in the near-term, with the median rate estimated at 5.6% in fourth quarter of 2015, then falling further to 5.2% in the final quarter of 2016, and 4.9% in the last quarter of 2017.
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