Overcast

Overcast

max temp: 16°C

min temp: 12°C

ESTD 1874 Search

Economy: Two members of the MPC back an immediate rise in interest rates

10:37 20 August 2014

Martin Weale, an independent member of the Bank of England

Martin Weale, an independent member of the Bank of England's Monetary Policy Committee, who was one of two members to back a 0.25% rise in interest rates at this month's meeting.

Archant

Two members of the Bank of England’s monetary policy committee (MPC) have broken ranks and voted for a 0.25% rise in interest rates, it emerged today.

shares

The minutes of the MPC’s meeting earlier this month showed that Ian McCafferty and Martin Weale dissented from the majority view of seven other members, including governor Mark Carney, that rates should be kept on hold.

It is the first split vote on rates since July 2011, although at least three more MPC members will need to shift their stance for the bank’s rate to be raised from 0.5% at which it has been held since 2009.

Rate-setters must weigh up the need to keep control of inflation with the risk that higher rates could derail the upturn.

Details of the latest discussions published by the bank revealed that most still felt that “there remained insufficient evidence of inflationary pressures” to justify an increase.

But the minutes added: “For two members, in particular, economic circumstances were sufficient to justify an immediate rise in bank rate.”

In response to the minutes, the pound climbed a cent against the euro and was also up against the US dollar. However, yesterday’s inflation data, showing that the Consumer Price Index eased to 1.6% last month from 1.9% in June was more benign than expected, giving the MPC more scope to delay an increase in interest rates.

Samuel Tombs, senior UK economist at Capital Economics, said the split vote meant that it “would be foolish” to rule out the possibility of a rise in rates during 2014.

“External members Martin Weale and Ian McCafferty both voted to raise interest rates to 0.75%. Although wage growth has remained weak, they emphasised that it was a lagging indicator of the amount of slack in the economy and that, given the time it takes for interest rate changes to affect the economy, it would be desirable to begin raising interest rates before all of slack had been used up.

“Nonetheless, data released since the MPC’s meeting not least the fall in inflation to 1.6% in July and the slower growth in employment have eased the pressure on the committee to tighten quickly. Moreover, inflation still looks on track to ease much further than the MPC expects this year and to remain weak in 2015.

“For now, then, we still expect the first hike to come in February 2015. But, even if the committee decides to get on the front foot and raise interest rates before the end of the year, low inflation should ensure that the pace at which they rise is extremely gradual by historical standards.”

shares

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

EADT BUSINESS

Chris and Hayley Lee, pictured outside The Bildeston Crown

PICTURE CONTRIBUTED 

EADT 20/9/07
EADT 22/12/07
EADT 25.4.09

A couple who held senior posts at a country hotel-restaurant when it won a clutch of awards has returned.

Matt Howard and Stuart Morton of chartered accountants and business advisers Price Bailey.

Twenty-four staff have lost their jobs at a Lowestoft department store which went into administration last month as urgent efforts continue to find a buyer for the business.

BSP International Foundations, part of Tex Holdings plc of Great Blakenham, which has bought the assets and business of G & M Power Plant.

Nineteen out of 35 jobs at an electric generator manufacturer have been saved after its business and assets were bought out of administration on Wednesday.

Aga is at the centre of a takeover tussle after revealing US electronic appliances giant Whirlpool was considering a bid to rival Middleby's £129 million offer.

Upmarket cooker firm Aga Rangemaster is at the centre of a takeover tussle after revealing US electronic appliances giant Whirlpool was considering a bid to rival Middleby’s £129 million offer.

A Punch Tavern pub

Pub group Punch Taverns is set to post a slight fall in annual earnings as it continues to offload pubs to cut its debt pile.

Landmark House and Beacon House.

A facilities management business owned by Suffolk County Council is moving home and undergoing a re-brand.

The Ann Letitia Russell lifeboat back home in Fleetwood with marina assistants Daryl Randles, Simon Price and Will Taylor.

In her heyday she saved more than 150 souls. Now port 
owner ABP has joined a community effort to save former lifeboat The Ann Letitia Russell.

Servest Group CEO Rob Legge.

Some of the region’s top professionals were involved in a recent sale deal involving two Bury St Edmunds-based firms, it has emerged.

Sizewell B pop-up farmers' market.

Farmers and producers were at Sizewell B nuclear power station at Leiston last week as it hosted a pop-up farmers’ market.

Ashley Gogan, Bedford Lodge

A four-star hotel in Newmarket has appointed a new face to head up its conference and events service.

Most read

Most commented

Topic pages