Bank of England holds base rate despite inflation fears

Members of the Bank of England’s Monetary Policy Committee have voted unanimously to freeze base rate at 0.1% despite the fact they expect inflation to reach 3% for a temporary period.

The Committee predicts that the direct impact of rises in prices on CPI inflation "will 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.

The MPC says that it will focus on medium-term inflation expectations when setting monetary policy, "rather than factors that are likely to be transient".