The Bank of England’s Monetary Policy Committee (MPC) has unanimously voted to keep the bank rate at 0.10%.

It also voted, by seven to one, to continue buying corporate bonds for its quantitative easing programme, aiming to purchase assets worth £895bn in total.

In the MPC’s monetary policy report for August, the group says that inflation rose to 2.5% in June “stronger than the 0.7% recorded in March,” adding that it expects this to rise to 4% in the final quarter of this year.

It insists that this will be a temporary state of affairs, and that inflation will return to 2% in late 2023.

The MPC also believes UK GDP to have grown by 5% in the second quarter of 2021, which is “around” 4% below its pre-pandemic level; stronger than the committee believed it would be by this time.

Santander UK chief economist Frances Haque comments: “[This decision] … was expected given the continuing positive outlook for economic growth; the full lifting of restrictions; and the fact that the MPC has continued to state that they will look through transitory rises in inflation.

“However, June did see a large jump in inflation to 2.5%, which is higher than the BoE’s projections for Q2 2021 set out in the May monetary policy rReport. Although this increase in prices may be transitory there continues to be the possibility of an earlier rise in the bank rate should rises in inflation become permanent.

“Further, there is the possibility that the BoE will start quantitative tightening earlier than currently expected, However, this will depend on the review they are currently undertaking.”

However, some commenters believe low rates are here to stay for some time yet. Permanent Wealth Partners co-founder Adam Walkom says: “When it comes to interest rates, the BoE, like every other central bank around the world, is committed to let the economy run hotter for longer, as it is looking to see some inflationary pressures as a sign that the economy is growing quickly.

“With this philosophy, there is no way they will raise rates any time soon. They will do their best to warn around inflation if it does start to really perk up, but words and action are two very different things.”

And Cyborg Finance chief technology officer Adam Hosker adds: “The inflation we have currently is the economic equivalent of long-Covid.

“It has not been caused by an overheating economy but by depressed output. It will settle down once the economy is back to its original output capacity.

“Raising interest rates will only hinder our economic recovery and it’s highly unlikely for some time yet.”

Meanwhile, Keystone Property Finance chief executive David Whittaker says: “For borrowers, the bigger question is whether SWAP rates reflect a different view from the MPC in the weeks ahead and start to rise again and the extent to which this is offset by competition between lenders, who generally have stronger appetites after a great H1 on completions.

“The divergence will probably be clearer at the next quarterly inflation report from BoE in early November. Fixed rates should be stable over this period, but the challenge will be whether the BoE can then ensure that Bank Rate rises are gradual as 2021 turns into 2022.