Bank expected to hold rates at 0.5 per cent
Amid signs that some Bank of England policymakers would like to start raising interest rates from the current 0.5 per cent, there have been calls for the Bank to keep policy relaxed when it announces its latest decision today.
The British Chambers of Commerce warned the Bank's Monetary Policy Committee (MPC) yesterday: "Despite some recent and very welcome signs of improvement in the economy, growth is still weak – particularly in the service sector. The threat of an economic setback is more serious at this early stage of recovery than the risk of higher inflation, so a premature interest rate rise would have damaging consequences."
The unanimous expectation is the Bank will not start to move rates before the end of this year, and even then only marginally. The Mansion House speech by the Bank's governor, Mervyn King, last month was generally taken in the City as a signal that rate rises are remote.
However, there are some signs that the balance of debate within the MPC has been tipping towards modest tightening. At last month's meeting one of the external members of the committee, Andrew Sentance, voted in favour of an interest rate increase of 0.25 per cent, to 0.75 per cent. Last November, Spencer Dale, the Bank's chief economist, opposed an extension of quantitative easing (QE) on the grounds that it might inflate asset prices unduly; but another external member, David Miles, voted for a still larger increase in QE. Other members, such as Adam Posen, have voiced worries about inflationary expectations becoming "de-anchored" from the Bank's 2 per cent target.
The departure of Kate Barker, the Bank's rate setter, in May, and the arrival of the former head of the National Institute of Economic and Social Research, Martin Weale, will not radically alter the balance of opinion within the committee.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...