MPC unanimous in rate cut vote

Posted: 20 Feb 2008 10:44:55 GMT

It appears that further cuts to the base rate of interest are on the cards, following the publication of the minutes from the latest Bank of England Monetary Policy Committee (MPC) meeting.

It appears that further cuts to the base rate of interest are on the cards, following the publication of the minutes from the latest Bank of England Monetary Policy Committee (MPC) meeting.

The minutes reveal that all nine members voted in favour of a cut, with one pushing for a larger reduction.

The MPC cut the base rate of interest by 0.25 percentage points but David Blanchflower wanted a more drastic 0.5 percentage point decrease.

Commenting on the minutes, Global Insight economist Howard Archer said that it appears most MPC members are reluctant to cut rates aggressively.

"We expect the Bank of England to trim interest rates by a further 25 basis points to five per cent in April or May, with the exact timing depending critically on just how weak the economic data is over the coming weeks and whether or not inflation expectations appear to be at least stabilising," he commented.

"Further out, we still expect interest rates to be down to 4.5 per cent by the end of the year and believe that they will fall to four per cent in the first half of 2009, despite the Bank of England's February Quarterly Inflation Report indicating that further monetary policy easing is likely to be limited," added Mr Archer.

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