Minutes show BOE fears over euro area

Mark Carney's majority at the Bank of England hardened its view on interest rates this month, saying increased risks from the euro area meant it was not yet time to begin raising borrowing costs.

Minutes of the monetary policy committee's October meeting, published yesterday, showed officials voted seven to two to keep the benchmark rate at a record low 0.5 per cent.

The committee said pessimism about the global economy had increased and there was "mounting evidence of a loss of momentum in the euro area". For bank governor Carney's majority, that "increased the risks to the durability of the UK expansion in the medium term".

In contrast, Martin Weale and Ian McCafferty said a rate increase was justified and that the economy had "not been affected by damaging financial contagion" from its biggest trading partner.

The tone taken by the majority raises the probability that rates will be kept on hold for longer, after Bank of England chief economist Andy Haldane said last week that market expectations for the first increase to come in the middle of next year were "not a bad bet".

"The majority opposing early hikes are becoming more entrenched," said Ross Walker, an economist at Royal Bank of Scotland in London. "The overall hawkish drift within the committee in previous months has been halted."