LONDON, Dec. 14 (Xinhua) -- The Bank of England (BoE) kept the bank rate at 0.5 percent on Thursday after their December meeting, and indicated that future increases would be "at a gradual pace and to a limited extent".
All nine members of the BoE's Monetary Policy Committee (MPC) voted to keep to the same rate set at its November meeting, when they raised it 0.25 percent, the first rise in over 10 years.
With the jobless rate at a 42-year low of 4.3 percent and the number of people working near an all-time high, slack in the economy has been largely eroded, which would be a prompt for a rate rise.
The BoE noted that CPI inflation was now 3.1 percent, well above its mandated target of 2.0 percent, also a prompt for a rate rise, and the MPC said it would pursue a policy to bring inflation down in the long term.
"The committee remains of the view that, were the economy to follow the path expected in the November Inflation Report, further modest increases in Bank Rate would be warranted over the next few years, in order to return inflation sustainably to the target," the MPC noted in its committee report.
The higher rate of inflation, up from 0.5 percent at the time of the Brexit referendum vote in June 2016 to 3.1 percent now, had been pushed above the 2-percent target by the boost to import prices, the committee said.
Inflation had been shoved sharply upwards over a year and a half by a substantial devaluation in sterling just after the Brexit referendum vote, as foreign exchange markets reacted to the news.
The BoE's MPC noted that Brexit was the "most significant influence on and uncertainty about" the economic horizon, and also that progress in Brexit talks between the British government and the European Union (EU) decreased the likelihood of a disorderly Brexit.
Sam Hill, senior UK economist with Royal Bank of Canada (RBC) in London, told Xinhua: "Today's minutes were light in terms of new information and the BoE seems to be firmly in a wait-and-see approach."
"While a cautious tone prevailed, the comments regarding Brexit were slightly more upbeat as the committee acknowledged that some progress was made in the Article 50 negotiations, which was expected to allow the negotiations to proceed to the second phase."
The future direction of monetary policy would be a cautious one, said Hill.
"For now, we think that the BoE will be happy to tread carefully on monetary policy and we maintain our call for Bank Rate to remain unchanged at 0.50 percent next year."
The next MPC meeting is in early February, at the same time as a quarterly inflation report and a public explanation by BoE governor Mark Carney on why inflation is 1.1 percent above target whereas the policies are to return it to 2 percent.
