The Bank of England's Monetary Policy Committee unexpectedly voted 8-1 to keep interest rates at 5.25 per cent in March.
Minutes today from the March 7-8th meeting showed the committee was content to leave rates unchanged based on the balance of risks, but said the short-term outlook for inflation was now slightly lower than in the February inflation report.
Most members did not want to spook volatile financial markets with a rate move this month, especially given expectations of higher rates among some investors.
The financial market volatility added to the case for holding rates this month," the minutes said. "An unexpected move by the Committee could provide an unwelcome addition to the uncertainty and volatility in financial markets."
The MPC agreed there was a more subdued picture of underlying consumer spending and developments in the housing market might also be a signal that house price inflation was starting to ease.
On the upside, the Committee judged the net impact of recent market moves such as a fall in the sterling exchange rate index could "push up the inflation projection a little".
The MPC also expected GDP in the first quarter to be as strong as expected at the time of the February inflation report.
