The Bank of England has decided against raising interest rates, holding them at the record low of 0.5 per cent.
There has been growing speculation about when interest rates would be increased after governor Mark Carney explained there would be a shift in the near future. Rates have sat at 0.5 per cent since March 2009 but the market is expecting a small rise in the opening months of next year. The Bank of England's rate setting committee was split on the decision in August.
Both Ian McCafferty and Martin Weale voted in favour of a 0.25 per cent rise to 0.75 per cent but were outvoted by the other seven members of the Monetary Policy Committee (MPC), including Mr Carney. The decision represented the first of the MPC since July 2011.
Interest rates are expected to edge up in the coming months but Mr Carney said that any rise would be small and gradual. A more measured approach makes it manageable for companies and consumers alike. Analysts are expecting the increase to come into force by the end of 2014 as introducing the change in 2015 would be too close to the general election in May.
Philip Shaw, chief economist at Investec, said: "Overall, our central case still sees the Monetary Policy Committee raising rates next month, not least because we struggle to envisage the committee either beginning to tighten in the first few months of next year, so close to May's general election, or waiting until the summer."
The UK economy has been performing well over the past year with the nation's GDP growing 0.9 per cent between April and June. This came after a 0.7 per cent rise in the previous quarter. This performance is set to outstrip economies in other developed countries across the world.
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