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Bank Of England Rate Hike Avoided

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The Bank of England (BoE) has avoided a rate hike, instead opting to retain the present rate of 0.5 percent.

Officials with the bank indicated that oil prices, which remain low, and restrained wage growth will stave off inflation while they retain their record low key interest rate, Bloomberg Business reported.

According to the officials, a “sustained firming in domestic cost pressures” would be necessary in order to suppress inflation back down to the target of 2 percent.

Bank officials were quoted by Bloomberg as having said that oil’s price drop increases “the likelihood that headline inflation rates” will stay under wraps.

The price of oil had fallen markedly again, increasing the likelihood that headline inflation rates would remain subdued, and nominal-wage growth had leveled off.

CNBC reported that the bank met expectations of economists polled by Reuters in its decision to postpone adding to its $569 billion in asset acquisitions over prior years.

In the bank’s minutes, the company noted that while the “downside risks to growth in emerging market economies” remains intact, it’s not without “risk of an acceleration of capital outflows in reaction to any increase in U.S. interest rates.”

Analysts believe that the British central bank might be stalling while it waits for the U.S. Federal Reserve to make in the upcoming week, however, the bank’s policymakers were quoted by The Irish Times as having said that their intent is not to match the Federal Reserve’s expected rate hike, noting that “no mechanical link” exists within its logic.

Bank of England Governor Mark Carney recently indicated that the bank will make its move at the appropriate time.

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