MPC still split on rate hike

The Bank of England monetary policy committee is still split seven-two on whether the UK interest rate needs to be raised, minutes released today show.

MPC still split on rate hike


Martin Weale and Ian McCafferty continue to be hawks among the flock on doves with both voting for a quarter point rise but no others have joined them to being tipping the balance.

A drop in the key inflation number to just 1.5% this week will have done nothing to strengthen the hand of the two hawks and will have served to discourage any of the other seven from switching stance.

Counterintuitively, UK unemployment continues to fall but is not feeding into inflation. The latest numbers show just 6.2% unemployment in the UK but any pressure to raise rates due to this will have been relieved by the low inflation reporting.

The minutes also show a growing unease among the committee members over the lack of growth or any meaningful inflation across the Eurozone. Weak economic performance in Europe weighing on the UK’s economy appears to be factoring into the decisions of the seven members voting to hold rates steady.

With many commentators and observers believing the Bank of England would be reluctant to raise rates in the months immediately preceding an expected general election at the start of May, time is fast running out on the prospects of a rise before next summer.

Policy watchers’ eyes now turn to the US but there is little expectation that the dovish Janet Yellen is anywhere close to beating Carney and company to the punch by raising rates across the Atlantic. 

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