Majority votes to keep low UK rates
Source: Agencies |
July 22, 2010, Thursday
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Print Edition
Print Edition
A SOLID majority of the Bank of England's rate-setting committee saw no need to raise interest rates at its meeting this month, according to minutes released yesterday, suggesting that the base rate may remain at an all-time low of 0.5 percent for some time.
Monetary Policy Committee member Andrew Sentance, who has been outspoken about persistently high inflation, advocated raising the rate to 0.75 percent but seven other members of the committee voted to stand still, although the consensus was that near-term inflation prospects had worsened, the minutes show.
Contrary to expectations that a prolonged recession would tame inflation, Britain's consumer price inflation has been stubbornly high and now stands at 3.2 percent.
The government's target is to keep consumer price inflation at around 2 percent.
The minutes note that inflation had declined from a 17-month peak of 3.7 percent in April, but was likely to be higher than expected for the rest of the year. The government's decision to raise value-added tax to 20 percent next year will pressurize prices, they said.
Monetary Policy Committee member Andrew Sentance, who has been outspoken about persistently high inflation, advocated raising the rate to 0.75 percent but seven other members of the committee voted to stand still, although the consensus was that near-term inflation prospects had worsened, the minutes show.
Contrary to expectations that a prolonged recession would tame inflation, Britain's consumer price inflation has been stubbornly high and now stands at 3.2 percent.
The government's target is to keep consumer price inflation at around 2 percent.
The minutes note that inflation had declined from a 17-month peak of 3.7 percent in April, but was likely to be higher than expected for the rest of the year. The government's decision to raise value-added tax to 20 percent next year will pressurize prices, they said.
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