The Bank of England has voted to keep interest rates on hold, demonstrating no rush to end five years of ultra-low borrowing costs.

The Monetary Policy Committee chose to maintain rates at their record low level of 0.5 per cent and the stock of assets purchased under the quantitative easing programme at £375bn.

Fears of a UK economic slowdown eased this week as key indices hinted at robust growth at the start of the year. But with inflation falling to 0.5 per cent in December, a quarter of the BoE’s 2 per cent target, few economists expect rates to rise before the autumn.

The oil price, which has halved since last June, triggered a sharp fall in inflation and Mark Carney, BoE governor, has said it was likely that price pressures could fall below zero. Last month, the MPC was unanimous in its decision to hold rates, with the two dissenters who had previously favoured a rise falling into line.

The rate-setting body is convinced the slide in oil prices will foster growth by boosting disposable income and lowering production costs. But its members fear there is a risk that deflation may become permanent if it damped inflation expectations. Next week, Mr Carney will write to the chancellor to explain why inflation has moved significantly from the bank’s target.

The BoE has signalled a reluctance to raise rates until there is a sustained improvement in workers’ pay. Regular weekly wage growth accelerated from 1.6 per cent to 1.8 per cent in the three months to November but real wages remain about 8 per cent lower than before the financial crisis.

The composite purchasing managers’ index, which combines manufacturing, construction and services data, rose from 55.5 in December to 56.9 in January, pointing to quarterly growth of between 0.5 and 0.7 per cent.

Data earlier on Thursday from Halifax showed UK house prices rose at their fastest pace for six months in the quarter to January, recording their biggest increase in that month since 2009.

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