Borrowing costs are set to fall after the Bank of England decided to hold interest rates steady for the first time in 22 months.
The bank’s monetary policy committee decided to keep the base rate unchanged at 5.25%, with the a 5:4 vote split. The narrow decision reflects the division among the nine ratesetters about whether borrowing costs have risen enough to ensure inflation falls to the official target level of 2%.
Andrew Bailey, the bank’s governor, cast the decisive vote to keep rates on hold after 14 consecutive increases. The move suggest he endorses the “Table Mountain” view of chief economist Huw Pill that rates should stay flat for a longer period of time, before gradually coming down at some point after the inflation threat has passed.
The pound dropped overnight to its lowest level against the dollar in six months, at $1.22.
The bank will make its next decision on 2 November, when it will also publish new growth and inflation forecasts.
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