The Bank of England kept its key interest rate and quantitative easing unchanged, as widely expected, on Thursday.
The nine-member Monetary Policy Committee headed by Andrew Bailey unanimously decided to hold the benchmark rate at a record low of 0.1 percent.
The central bank retained the existing stock of corporate bond purchases at GBP 20 billion and the government bond purchases at GBP 875 billion, taking the size of total quantitative easing to GBP 895 billion.
Citing rapidly improving economic outlook and rising cost pressure, Andrew Haldane voted against the proposition to retain the size of government bond purchases. He sought to reduce the size to GBP 825 billion from GBP 875 billion.
The MPC said it did not intend to tighten monetary policy at least until there was clear evidence that significant progress was being made in eliminating spare capacity and achieving the 2 percent inflation target sustainably.
Consumer price inflation exceeded the 2 percent target in May. Inflation is expected to pick up further above the target, owing primarily to developments in energy and other commodity prices, and is likely to exceed 3 percent for a temporary period, the bank said.
The committee expects the direct impact of rises in commodity prices on CPI inflation to be transitory.
More generally, the Committee’s central expectation is that the economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth and inflation will fall back.