Bank chiefs discussed rate increase
Bank of England policymakers considered further action to boost the economy this month amid concerns over tightening credit conditions and a slowdown in the UK recovery, it emerged today.
Minutes of the bank's August interest rate meeting showed the monetary policy committee discussed the need for more quantitative easing (QE) but opted to keep its programme to boost the money supply at £200 billion.
Members voted 8-1 to leave interest rates at a record low of 0.5%, although the minutes revealed they also considered the arguments in favour of a small increase from the current "exceptionally low" level. Andrew Sentance remained the only member on the committee to vote in favour of a rise to 0.75%.
Details of the MPC's discussion came a day after figures revealed inflation had edged down from 3.2% to 3.1% - still well above the bank's 2% target.
The committee said that in the last month surveys had suggested a softening in business and consumer sentiment. And while growth in the second quarter was "surprisingly robust" it had also been erratic, the minutes added.
The committee considered arguments for further QE because credit conditions seemed set to remain tighter for longer than expected and there were suggestions of a slowing in output growth.
However, Mr Sentance argued that the economic conditions had improved over the past 12 months and that the inflation outlook had shifted sufficiently to begin the gradual process of raising rates.
He added that figures from the second quarter suggested the UK recovery was gathering momentum.
The minutes noted that UK inflation had been above target in all bar nine of the past 50 months. And the forthcoming increase in VAT will mean inflation is likely to stay above target for longer than previously expected.
ING economist James Knightley said that with the severity of the UK's fiscal austerity measures, and with consumer confidence already softening, the bank will not look to raise rates until next year at the earliest.
He added: "We forecast GDP growth in a 1%-2% range for the next three years, which should dampen inflationary pressures."
- 1 I was raped by another man. And now the Government wants to take away the one thing that saved my life
- 2 Wikipedia edits from inside Parliament removing scandals from MPs' pages, investigation finds
- 3 Preston fan who appeared to snatch Jermaine Beckford's shirt from eight-year-old boy identified and says: 'the truth will come out'
- 4 Johnny Depp facing 10 years in jail for illegally bringing dogs to Australia
- 5 Iran launches anti-Isis cartoon competition 'to expose true nature of Islamic State'
Wikipedia edits from inside Parliament removing scandals from MPs' pages, investigation finds
Australian man punched in the face for defending Muslim women from abuse on train
Priest warns pupils the 'Charlie Charlie Challenge' is 'demonic activity'
Johnny Depp facing 10 years in jail for illegally bringing dogs to Australia
Iran launches anti-Isis cartoon competition 'to expose true nature of Islamic State'
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
iJobs Money & Business
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...
£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...