Bank of England minutes reveal close vote on interest rates
The minutes of the most recent meeting of the Bank of England’s Monetary Policy Committee, released on Wednesday, show that the vote on interest rates was sharply divided, with five committee members voting to keep rates on hold but four, including the Bank’s governor, voting to raise them. Most analysts expected that the vote would turn out to have been not nearly so close, at 7 to 2 in favor of holding rates steady. The closeness of the vote, some of those analysts say, raises the chances that rates will go up again in July. Even though consumer price in inflation dropped in May, it still remains above the 2 percent target set by the government.
According to the minutes, those in favor of raising rates argued that there was no reason to wait to raise interest rates. Many analysts were expecting it, they said, and by raising rates sooner the peak they rise to could possibly be kept lower. They also argued that house prices were continuing to go up all over the country. However, the five who voted to keep rates on hold worried that a rate hike then would take the market by surprise and that it would have an adverse effect on the yield curve. They also said they saw signs that house prices were beginning to slow their climb.