BoE unanimous on rate hold

20-09-2006

All eight members of the Bank of England's monetary policy committee voted to keep interest rates at 4.75 per cent last month.

Minutes released today show that the decision by policymaker David Blanchflower, who had been the sole dissenter against the decision to raise rates a quarter of a per cent, to vote for a no change "had been a very close call".

The bank says that the British economy is performing slightly ahead of expectations, but concerns still exist over the threat of rising inflation, leading commentators to maintain their view that rates will be raised again before the year is out.

Today's release explained that inflationary pressures since the 0.25 percentage point rise "had not been sufficient to warrant a change in the bank rate this month".

The bank explained that despite "increased uncertainty about outlook for US economy", the signal to "wage and price-setters in advance of the next pay round was sufficiently important that it would be unwise to vote for reducing rates this month".

But the BoE admits that there are ongoing worries about a weak labour market.


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