BoE voted 7-2 for rate rise

22-11-2006

BoE voted 7-2 for rate rise
The members of the Bank of England's (BoE) monetary policy committee (MPC) voted seven to two in favour of a 0.25 percentage point rise in base interest rates earlier this month.

Today's minutes issued for the November 7th and 8th meeting reveals that the majority of committee members thought consumer price index (CPI) inflation would continue above the two per cent target if the bank maintained rates at 4.75 per cent.

However, two MPC members dissented, with one claiming that the impact of rising energy prices would dissipate in 2007, while another said that a weakness in output and retail sales could be harmed by a rate hike.

"But for one member, the need for a rise was less pressing. The key uncertainty was on the supply side into the economy.

"Another member placed more weight on the downside risks to demand and inflation," today's BoE statement said.

For seven of the MPC's number, the unclear relationship between house prices and household spending and "few significant developments" in the British economy, the quarter of a percentage point rise represented the right decision.

The two members that voted against the increase were Rachel Lomax and David Blanchflower.


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