Interest rate rise looking unlikely until well into 2012

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The latest minutes of the Bank of England's Monetary Policy Committee and other economic news point to interest rates staying on hold until well into next year, analysts say.

The Treasury's latest poll of independent forecasts also reveals a consensus growth figure of just 1.3 per cent for 2011 – against the official figure of 1.7 per cent.

In July, as in June, seven members voted to keep rates on hold at 0.5 per cent, with two voting for a 25-basis-points rise. The quantitative easing (QE) programme was also left on pause, by eight to one.

The minutes were not as "doveish" as some had expected, and there was little discussion of an imminent round of QE beyond the habitual call from Adam Posen, an external member, for another £50bn to be injected. The MPC noted that "recent developments had reduced the likelihood that a tightening in policy would be warranted in the near term".

Weakness in pay was an encouraging sign inflationary expectations, down a little in the latest survey, are not pushing wages up. The Bank's Agents' Survey, out yesterday, pointed to a slowdown in manufacturing. Meanwhile, the Council of Mortgage Lenders said home loans surged in June by 16 per cent.