Just two policy members vote for interest rate rise

| June 22, 2011 | 0 Comments
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Minutes of the Bank of England’s June 8-9 meeting have been released today and have revealed the Monetary Policy Committee (MPC) voted 7-2 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.

For the last four months, three policy members voted for an interest rate rise to combat stubbornly high inflation.

However, the departure of Andrew Sentance meant Martin Weale and Spencer Dale were lone voices on the committee.

Mr Sentance, who since June 2010 has voted for higher rates, was replaced by Ben Broadbent, a former Goldman Sachs economist, when his term ended on May 31.

Mr Broadbent voted with the majority of the MPC and opted to keep interest rates at the historic low of 0.5% - where they have been since March 2009.

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.”

Inflation is currently more than double the 2% target and 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 low because it states the economy is too fragile to handle higher rates at this time.

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