Bank minutes suggest low rates for some time to come

| July 20, 2011

Minutes of the Bank of England’s July 6-7 meeting have been released today and have revealed the Monetary Policy Committee (MPC) again 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.

Martin Weale and Spencer Dale were, once again, lone voices on the Committee and have, for several months now, voted to lift rates to combat stubbornly high inflation.

However, recent figures show the economy appears to be faltering so it was thought that the central bank may be reluctant at this stage to lift interest rates as the recovery is losing momentum.

However, inflation is currently running at more than double the 2% target and it was thought the central Bank may lift rates to bring inflation down – as many central Banks are doing throughout the world.

The bank has, however, hinted that it will keep rates low for the medium-term because it believes that the economy is too fragile to handle higher rates at this time, despite higher inflation.

The minutes said: “Recent developments had reduced the likelihood that a tightening in policy would be warranted in the near term.”

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