{"id":211,"date":"2008-05-21T10:51:37","date_gmt":"2008-05-21T10:51:37","guid":{"rendered":"http:\/\/www.the-finance-zone.co.uk\/uncategorized\/bank-voted-8-1-to-maintain-rates\/"},"modified":"2008-05-21T10:51:37","modified_gmt":"2008-05-21T10:51:37","slug":"bank-voted-8-1-to-maintain-rates","status":"publish","type":"post","link":"https:\/\/the-finance-zone.co.uk\/index.php\/2008\/05\/21\/bank-voted-8-1-to-maintain-rates\/","title":{"rendered":"Bank voted 8-1 to maintain rates"},"content":{"rendered":"\n\n\n
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The Bank of England voted eight to one to keep interest rates on hold at 5%, minutes of its last meeting show.<\/strong><\/p>\n

The only member of the bank’s Monetary Policy Committee (MPC) who favoured a cut was David Blanchflower, who wanted a reduction to 4.75%.<\/p>\n

Inflation has risen in recent months, driven by high oil and food prices, making policymakers reluctant to cut rates despite the cooling economy.<\/p>\n

The MPC made clear an interest rate cut is unlikely “for a few months”. <\/p>\n

‘Letter-writing territory’<\/strong><\/p>\n

Recent data showed the Consumer Prices Index (CPI) reached an annual rate of 3%, above the government’s own target of 2%, further reducing chances of a rate cut.<\/p>\n

March’s 0.8% monthly rise in consumer prices was the steepest for nearly seven years.<\/p>\n

If inflation tips beyond 3%, Bank of England Governor Mervyn King is obliged to write a public letter to Chancellor Alistair Darling, to explain what has happened and what the bank is doing to address the issue.<\/p>\n

The MPC said that “with inflation set to move into letter-writing territory in the next month or two, the next cut looks unlikely to come for a few months unless the activity news is absolutely dreadful.”<\/p>\n

“Given the sharp rise in inflation in April – figures that the Committee had at the time of their decision – it is not surprising that eight of the nine-strong MPC voted in favour of interest rates on hold two weeks ago,” said George Buckley, head economist at Deutsche Bank.<\/p>\n

Peter Dixon of Commerzbank said the decision was “tactical” because inflation was not high enough “to warrant rate hikes nor growth sufficiently low enough to warrant cuts”.<\/p>\n

Recent figures showing weakness in both the manufacturing and service sector have increased pressure on the MPC to cut rates to 4.75%.<\/p>\n

David Blanchflower, who was a dissenting voice in January wanting a rate cut, argued that it was “important to look through the short-term spike in inflation” and focus on the “current and prospective weakness of demand”.<\/p>\n

Jonathan Loynes of Capital Economics said: “Most believe that a significant slowdown is required to get inflation back to target and were concerned that another cut this month would give the impression that the committee was targeting growth, not inflation.”<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

The Bank of England voted eight to one to keep interest rates on hold at 5%, minutes of its last<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","footnotes":""},"categories":[27,48],"tags":[],"class_list":["post-211","post","type-post","status-publish","format-standard","hentry","category-interest-rates","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=211"}],"version-history":[{"count":0,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/211\/revisions"}],"wp:attachment":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}