MPC decision was unanimous

Posted: 15 Aug 2007 12:04:30 GMT

The Bank of England's Monetary Policy Committee (MPC) was unanimous in deciding to freeze the base rate in August.

The Bank of England's Monetary Policy Committee (MPC) was unanimous in deciding to freeze the base rate in August.

Minutes from the MPC meeting have been published and they show that all nine committee members were in favour of maintaining the rate at 5.75 per cent.

Further to this, the minutes point out that "most members emphasized that they had no firm view on whether interest rates would need to rise further", hinting that they may have peaked.

The meeting took place before it was announced yesterday that consumer price index annual inflation dropped from 2.4 per cent in June to 1.9 per cent in July - below the government's target.

This, according to New Star Asset Management, is enough evidence to suggest that interest rates will not rise again before 2008.

"The unanimous vote to leave rates unchanged in August was in line with our MPC-ometer's prediction and the minutes indicate less of a tightening bias than suggested by last week's Inflation Report," said New Star economist Simon Ward.

"Coupled with yesterday's dramatic inflation drop and a surprise further fall in average earnings growth to a four-year low, this news strengthens our belief that interest rates have peaked for the year at 5.75 per cent."

Financial analyst Global Insight however, forecasts one more rise of 0.25 per cent before the end of 2007.

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