Bank of England interest rate vote was 8-1
Posted on 23 January 2008 by
The Bank of England (BoE)'s decision to leave the interest rate unchanged at 5.5% was the result of an 8-1 vote, minutes published today reveal.
Only one member of the Bank's Monetary Policy Committee (MPC), David Blanchflower, voted against the move, preferring instead a rate cut of 0.25 percentage points.
The strong majority at the meeting, which took place when there was some expectation of a possible rate cut, came after its members discussed a 'marked worsening' in the short-term inflation outlook.
The committee also considered the message that cuts made in two successive months might send to the wider economy. The minutes reveal concerns that such a move "might, given the current conjuncture, encourage observers to think that the Committee was focused more on stabilising demand than meeting the inflation target."
Speaking last night, BoE governor Mervyn King acknowledged that higher energy and food prices were likely to push inflation above the government's 2.0% target. Referring to his obligation to write to the chancellor if the rate reaches 3%, Mr King said: "It is possible that inflation could rise to the level at which I would need to write an open letter of explanation, possibly more than one, to the Chancellor."
Publication of the minutes comes after the US central bank yesterday slashed rates by 0.75 percentage points, a week ahead of its scheduled interest rate decision. Economists agree that no such move is likely in the UK, but many expect the Bank to lower the rate to 5.25% when it announces its next decision on 7 February.
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