"This was widely expected seeing as the BoE has only just embarked on a new wave of QE, while the new flagship Funding for Lending Scheme (FLS) only got going yesterday," said James Knightley at ING Bank, "Certainly the GDP numbers were bad and inflation is slowing sharply, but other data has been better with employment rising and business activity surveys pointing to growth (albeit modest)."
Knightley also said that they don't expect any further policy changes until the November MPC meeting at the earliest. "Even then, we suspect it would be an expansion of QE over an interest rate cut. At the June meeting, the MPC discussed the possibility of a rate cut, but decided against it due to concerns about the impact on bank lending, as bank interest margins would be squeezed (savings rates cannot go much lower, but mortgage rates linked to the bank rate can). This could further curtail bank lending. The BoE was also worried about the potential for 'the functioning of the money markets to become impaired'.” He added.