LONDON: The Bank of England kept its interest rate at 0.50 percent on Thursday, but signalled a possible August cut in response to Britain's vote to exit the EU.
At its first monetary policy meeting since the June 23 referendum vote on Brexit, the BoE also maintained the amount of cash stimulus pumping around the economy at £375 billion ($497 billion, 448 billion euros), it said in a statement.
The central bank added that the majority of its nine policymakers supported looser monetary policy in its next decision due August 4.
"The precise size and nature of any stimulatory measures will be determined" next month, the statement said.
BoE governor Mark Carney has warned that Britain could fall into recession as businesses delay new projects because of the shock referendum result.
At July's meeting on Wednesday, only one member of the Monetary Policy Committee (MPC), Gertjan Vlieghe, voted for a cut in the interest rate to a record-low 0.25 percent, while all members backed keeping quantitative easing (QE) stimulus at £375 billion.
"The MPC was committed to taking whatever action was needed to support growth and to return inflation to the (2.0-percent) target over an appropriate horizon," minutes of the latest meeting said.
"To that end, most members of the Committee expected monetary policy to be loosened in August," they added.
The British pound briefly jumped above $1.34, while London's FTSE 100 index slid in reaction to the central bank announcements.
Explaining the divergence in markets, ETX Capital analyst Neil Wilson told AFP:
"Lower rates tend to boost equities because investors are not getting returns in cash/bonds and so seek out yield from" company shares.
"A weak pound is good for the FTSE 100 as about 75 percent of earnings are from overseas," he added.
Following the referendum result, the pound slumped to a 31-year-low under $1.28, before rebounding in recent days. While a weak pound helps exporters, it makes imports more expensive, which in turn can push up inflation.
The BoE's minutes stated that survey data since the referendum result "suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions", while housing market activity is set for "significant weakening".
"Taken together, these indicators suggest economic activity is likely to weaken in the near term," they added.
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