But the Bank of England kept alive the prospect of tighter monetary policy soon.

It said it would probably have to raise its Bank Rate from its all-time low of 0.1% “over coming months” if the economy performed as expected.

Seven of its nine policymakers voted to hold off a rate rise for now so they could see the how many people became unemployed following the recent end of the government’s job-protecting furlough scheme.

Only two members of the Monetary Policy Committee – Deputy Governor Dave Ramsden and Michael Saunders – voted for an immediate 15 basis-point rate hike.

The Bank of England’s s cautious approach comes a day after the US Federal Reserve said it would start scaling back its bond-buying programme this month, a precursor to its first rate increase which investors expect in mid-2022.

The European Central Bank has been more explicit about its determination to keep stimulus flowing into the euro zone economy. Its President Christine Lagarde said this week that the ECB was very unlikely to raise rates next year.

In its announcement today, the Bank of England said the MPC voted 6-3 in favour of allowing its government bond-buying programme to reach its full size of £875 billion.

Catherine Mann joined Ramsden and Saunders to scale back that part of the bank’s stimulus programme.

Including its £20 billion of corporate bond holdings – which this month will start to be reinvested in greener debt – the total asset purchase target remained at £895 billion.

The Bank of England said most MPC members still thought “there was value in waiting for additional inflation on near-term developments in the labour market” before deciding to ease off on stimulus.

This marked a warning against premature bets on tightening, which they had also made in September.

Earlier today, Britain’s statistics office said survey evidence showed most workers who were still on the government’s furlough programme when it closed at the end of September had returned to their employers on the same hours.

The MPC members who voted against a rate hike now also noted a recent slowdown in consumer demand as well as the risk that higher inflation hits spending by households.

A Reuters poll published last week showed economists had mostly expected a 6-3 vote in favour of keeping Bank Rate on hold, in contrast to the near certainty placed on a rate hike by investors after Governor Andrew Bailey spoke last month of the need to act to contain inflation expectations.

The Reuters poll had pointed to no change in the bond-buying programme.

The Bank of England’s new forecasts showed a weaker picture for Britain’s economic growth as the bottlenecks that have weighed on global supply chains continued in the near term.

The world’s fifth-biggest economy was seen regaining its pre-pandemic size in the first quarter of 2022, later than the bank’s projection made in August of the last three months of this year.

Britain’s expected economic growth rate in 2021 was trimmed slightly to 7% and the forecast for 2022 was cut to 5% from a previous projection of 6%. Growth is expected to slow sharply to 1.5% in 2023 and 1% in 2024.

Inflation was seen jumping to around 5% in April next year, driven up mostly by the surge in global energy prices, before falling back to just below the bank’s 2% target at the end of its three-year forecast period.

That projection was based on the bank’s usual practice of taking energy prices predicted by futures markets for six months’ time, and assuming that prices then stay unchanged for the remainder of the Bank of England’s three-year forecast period.

However, it also drew attention to an alternative scenario, which included the drop-off in futures prices that has been priced into energy markets.

That scenario showed inflation was likely to be “materially lower” than its 2% target in the second half of its three-year period, if interest rates also rose as fast as markets expect.

The inflation forecasts appeared to send a signal to investors that they have been pricing in too many rate hikes by the Bank of England.

The interest rate pricing used by the Bank of England show that its Bank Rate will hit 1% by the end of 2022.