Experts split on interest rates

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The Independent Online

This month's decision to leave interest rates untouched divided sharply the Bank of England's economic experts, it was revealed today.

This month's decision to leave interest rates untouched divided sharply the Bank of England's economic experts, it was revealed today.

Minutes of the Bank's Monetary Policy Committee meeting two weeks ago show that, for the second month in succession, members decided by just one vote to keep the official cost of borrowing at 6 per cent.

Four members wanted to raise rates by a quarter point, to head off rising inflationary pressures. The majority, led by bank governor Sir Eddie George, took the view that the risks of holding rates were "not great".

The committee noted that rising oil prices could affect inflation in the short term but said it was questionable whether rates should be raised to counter any pick-up in inflation due solely to higher fuel costs.

The minutes say: "In the longer term the oil price might fall back in line with market expectations, and if it did not it would tend to dampen domestic demand both here and abroad."

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