The Bank of England has decided to keep interest rates at 0.25% but suggested rates could fall further in November if inflation rises.
All nine members of the Bank’s Monetary Policy Committee voted to keep interest rates on hold following last month’s cut.
The Committee also voted unanimously to continue with a range of measures to stimulate the economy, including the purchase of £10 billion of corporate bonds and government bonds of £60 billion.
The Bank said in its minutes that the “contours of the economic outlook following the EU referendum had not changed”.
“News on the near-term momentum of the UK economy had, however, been slightly to the upside relative to the August Inflation Report projections. The Committee will assess that news, along with other forthcoming indicators, during its November forecast round.”
The Bank cut interest rates to a new record low in August as part of a range of measures designed to help boost demand following the vote to leave the EU.
It is the first interest rate cut since 2009, when the financial crisis was at its peak.
Howard Archer, chief UK economist at IHS Global Insight, said: “At this stage, we believe it is still just about more likely than not that the Bank of England will take interest rates down to 0.10% from 0.25% in November.
“However, there is clearly an increased chance that the Bank of England will sit tight on interest rates in November given the current resilience of the economy – and the MPC could also be influenced by wanting to see what Chancellor Philip Hammond comes up with in the Autumn Statement.
“If the Bank of England does hold fire in November, we expect interest rates to go down to 0.10% early in 2017.”
Some critics have argued that the Bank has behaved too aggressively in its actions post-Brexit.
Recently published economic data has suggested that the prophecies of doom and gloom from the Remain camp have failed to materialise, although many economists still believe the economy is heading for a sharp slowdown.
The Bank said that since August a number of indicators of near-term economic activity “have been somewhat stronger than expected”.
“The Committee now expect less of a slowing in UK GDP growth in the second half of 2016,” the Bank said.
It said the near-term outlook for the housing market was less negative than it thought it would be and that consumption was stronger than expected.
Bank of England Governor Mark Carney has come in for criticism from politicians over his post-Brexit predictions about the state of the economy. He responded by saying that the actions of the Bank had managed to reduce the impact of the decision to leave the EU.
Jeremy Duncombe, director at Legal & General Mortgage Club, said: “After last month’s interest rate drop, it is unsurprising to see that the Bank of England has decided to maintain the base rate at its historical low of 0.25%. The mortgage market has experienced a real buzz of positive activity following last month’s decision, with a real feeling of resilience permeating throughout.
“With the base rate at this record low, it is an opportune time for borrowers to remortgage their homes and secure a more favourable mortgage deal. Brokers should get in touch with their clients and reinforce the message that the housing market remains open and it is very much business as usual for brokers and borrowers alike. However, consumers and advisers should act sooner rather than later, as the status quo could be all change again after the Autumn Statement from the new Chancellor in November.”
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