Bank minutes reveal three policy members voted for rate rise

| February 23, 2011 | 0 Comments

Minutes of the Bank of England’s February meeting have been released today and have revealed the Monetary Policy Committee (MPC) voted 6-3 to lift interest rates and 8-1 to restart the Bank’s quantitative easing (QE) scheme.

Adam Posen, again, called for an injection of £50 billion via the QE scheme to boost the economy.

However, as well as Andrew Sentance and Martin Weale, Spencer Dale also voted for an interest rate rise to combat stubbornly high inflation.

Mr Sentance has, since last June, voted for the base rate to be lifted, while this was the second consecutive month in which Mr Weale voted for an interest rate rise.

Last week, the Office for National Statistics (ONS) announced Consumer Price Inflation (CPI) rose to an annual rate of 4% in January – the highest rate since November 2008.

The latest figures takes inflation to double the Government’s target of 2% – where it has been for more than a year.

Inflationary pressures are arising from either external forces such as commodity prices, or temporary domestic factors such as the recent VAT hike, according to Mervyn King, Governor of the Bank of England.

The CPI inflation rate is a benchmark for the MPC and many experts are now questioning when the Bank will start to increase rates from their historic low of 0.5%.

Meanwhile, the minutes said: “Most members agreed that the balance of risks to inflation in the medium term relative to the target had moved upwards in recent months and that the case for withdrawing some of the current exceptionally accommodative monetary policy had consequently been strengthened.”

The minutes follow the Quarterly Inflation Report from the Bank of England which did hint that rates may have to rise two or three times this year in order for inflation to fall closer to its target.

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