As well as holding rates at an all-time low, the MPC also agreed to continue with a £60bn government-bond buying programme, taking its total holdings to £435bn, in efforts to hit its 2% inflation target.
The bank will also continue to buy and hold investment grade corporate bonds of £10bn.
In a letter to Chancellor Phillip Hammond, Bank of England governor Mark Carney said the UK’s “flexible, dynamic economy” would soon find a new natural equilibrium but said: “Monetary policy can still play a role in smoothing part of this adjustment by appropriately balancing the forces acting to push inflation above the target with those expected to push activity below the economy’s new path for potential output.”
In its November Inflation Report the MPC anticipated a rise in CPI inflation to 2.75% in 2018 as a result of a fall in sterling, before dropping to 2.5% by 2020 and returning to its target over the following year.
