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Bank of England policymakers remain split on rates | Bank of England policymakers remain split on rates |
(40 minutes later) | |
Bank of England policymakers voted six to three in favour of keeping rates on hold at a record low of 0.5% this month, minutes of the Monetary Policy Committee's (MPC) April meeting show. | |
It is the third month in a row that three members voted for a rise. | It is the third month in a row that three members voted for a rise. |
The MPC said the inflation outlook had not changed enough to alter their view. | The MPC said the inflation outlook had not changed enough to alter their view. |
A rate rise in current circumstances would "adversely affect consumer confidence, leading to an exaggerated impact on spending", the MPC said. | A rate rise in current circumstances would "adversely affect consumer confidence, leading to an exaggerated impact on spending", the MPC said. |
Inflation forecast | Inflation forecast |
One day after the decision was made, it was announced that producer price inflation had unexpectedly accelerated in March to 5.4%, mainly due to higher crude prices. | |
However, since then it has also been revealed that the rate of consumer prices index (CPI) inflation fell in the month to 4%, from 4.4% in February. | However, since then it has also been revealed that the rate of consumer prices index (CPI) inflation fell in the month to 4%, from 4.4% in February. |
Following the slowdown, financial markets do not now expect the Bank to raise rates until August. | |
It was "hard to know how to interpret" the March inflation data, an advance - but insufficiently detailed - estimate of which was provided to the Bank in time for their meeting, according to the meeting's minutes. | It was "hard to know how to interpret" the March inflation data, an advance - but insufficiently detailed - estimate of which was provided to the Bank in time for their meeting, according to the meeting's minutes. |
Indeed, the Bank again upped its forecast for inflation over the coming months - thanks to further rises in commodity and energy prices - and said there was now a significant risk inflation could exceed 5%. | |
However, despite concerns raised by the more hawkish members that inflation could become more entrenched, the MPC said recent data suggested that wage growth had remained muted. | |
A key question for the committee was how long an apparent recent softening in household spending would continue. | |
On the one hand, it could be due to a long-term squeeze on real incomes as wages fail to keep up with inflation, but on the other it could be a short-term response to the VAT rise and other temporary factors. | |
Bank chief economist Mr Dale and external MPC member Martin Weale both again voted for a rise in rates to 0.75%. | Bank chief economist Mr Dale and external MPC member Martin Weale both again voted for a rise in rates to 0.75%. |
And Andrew Sentance maintained his call for an increase to 1%. | And Andrew Sentance maintained his call for an increase to 1%. |
Meanwhile, Adam Posen was again a lone voice calling for an additional £50bn of quantitative easing. | Meanwhile, Adam Posen was again a lone voice calling for an additional £50bn of quantitative easing. |
The Bank will, however, maintain the stock of UK government bonds it owns at £200bn. | The Bank will, however, maintain the stock of UK government bonds it owns at £200bn. |