MPC Confident In Rate Decision

Summary: The Bank of England was confident in its decision to hold interest rates at its last meeting. Minutes released from the monetary policy committee's (MPC) meeting on June 8th show that members voted seven to one in favour of holding rates at 4.5 per cent.

The Bank of England was confident in its decision to hold interest rates at its last meeting. Minutes released from the monetary policy committee's (MPC) meeting on June 8th show that members voted seven to one in favour of holding rates at 4.5 per cent. Only one member voted for a rise of 0.25 per cent, as the committee appeared to balance inflationary fears against the wider needs of the economy, with the reluctance to raise interest rates welcomed by those seeking a mortgage. The minutes reveal that mixed messages from the housing market, weak growth in the UK, falling equity prices and a slowdown in the US economy all concerned the bank, moving the MPC to downplay concerns over rising inflation. The minutes stated: "Given that recent developments had been broadly in line with the May inflation report, and that there were significant risks to the outlook in both directions, most members felt that the rate should remain unchanged this month." Speaking at Mansion House on June 21st, Mervyn King, governor of the bank, hinted that the minutes are a good source of future predictions for those with an interest in future rate rises. "All those listening to the speeches of MPC members - including this one - for a hint as to the decisions we shall take in the coming months will be disappointed repeatedly," he said. "We make up our minds one month at a time. Those, however, who read our minutes, inflation reports and speeches to understand our thinking will mine a richer seam."