MPC remains split over best rates policy for the economy

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The Independent Online

The stalemate on the Bank of England's Monetary Policy Committee (MPC) has continued for a second month, the minutes of its November meeting reveal. As in October, seven of its nine members voted for no change to interest rates and no return to quantitative easing, while the votes of the other two members cancelled each other out.

The minutes, published yesterday, show that the two dissenting members were Adam Posen and Andrew Sentance, who, as in October, took diametrically opposed views about what the MPC should do now.

Mr Posen urged the Bank to relaunch its quantitative-easing programme of stimulus to the economy, on the grounds there is a risk that Britain will otherwise fall back into a damaging recession. Mr Sentance, on the other hand, voted for a small increase in interest rates, amid the continuing failure of the MPC to bring inflation back down towards its 2 per cent target.

The minutes show that the rest of the committee believed the trade-off between recessionary risk and higher inflation was too close to call.

Howard Archer, the chief UK economist at IHS Global Insight, said the tension suggested there would be little change to policy in the short term. "The Bank of England is most likely to keep interest rates down at 0.5 per cent until at least late 2011," he said. "Meanwhile, the Bank is clearly keeping the door open to further quantitative easing should growth falter markedly over the coming months as the fiscal tightening increasingly bites."

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