Base rate setters unanimous in April
The Bank of England’s Monetary Policy Committee has published the minutes of its April rate-setting meeting which reveal that the decision to keep the base rate at its historic low of 0.5% was unanimous.
The minutes state: “All members agreed that the events of the past month had not been significant enough to substantially alter their views of the medium-term outlook for inflation and activity.”
However, concerns about inflation did come to the fore, with oil and some other commodity prices having risen substantially over the two months prior to the April meeting, and committee members said they would continue to monitor developments closely.
So far, these include news that the UK’s official rate of inflation rose to 3.4% in March, up from 3% in February.
The rate, which is based on the Consumer Prices Index (CPI) and therefore excludes housing costs, was on the wrong side of expectations as it nudged towards the 14-month high of 3.5% recorded in January.
According to the Office for National Statistics, the rise was driven by higher petrol and food prices and the continuing effects of the reinstatement of VAT at 17.5%, in January.
However, back in February the Bank’s governor, Mervyn King, dismissed fears that soaring inflation that would demand a significant rise in interest rates this year, saying that inflation was likely to fall back to its 2% target in the second half of 2010, and then fall further.
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