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28th of June 2011
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BoE policymaker supports low interest rates

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by Kay Mitchell

One of the members of the Bank of England’s Monetary Policy Committee (MPC), Paul Fisher, has argued that the central bank is right to keep interest rates low.

His comments come despite leading business groups urging the bank to lift rates to combat soaring inflation, which is currently more than double its 2% target.

Last week, Bank of England Governor Mervyn King continued to defend low interest rates, hinting that a rate hike may not be on the cards this year, as widely expected.

Mr King said: “The Committee is watching extremely carefully for any signs of a pickup in domestically generated inflation and it will take action as soon as it is appropriate to do so.”

Speaking to a financial audience in London, Mr Fisher, meanwhile, said lifting rates would have injected volatility into inflation.

Inflation is expected to hit 5% later this year but the central bank has reiterated that it will fall back to its target around 2012.

The bank continues to keep rates at the historic low of 0.5% because it states the economy is too fragile to handle higher rates at this time.

Earlier this month, the bank left interest rates unchanged and details of how the nine members voted will be published tomorrow.

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News posted: June 21, 2011

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