The standard interest base rate was closer to a change in February than the month before according to the latest release of the Bank of England’s Monetary Policy Committee’s (MPC) most recent minutes. The latest release of the MPC minutes showed there was a vote of 6-3 for an increase in February which is one member more than in the past month. The new member joining the votes for an increase was Spencer Dale.
Committee member Andrew Sentance has routinely voted for an increase in the rate and did so again in the February meeting. Member Martin Weale first voted for an increase in the January meeting and did so again in February. Along with Stephen Dale there were three members voting for the increase however there were differences in votes as to how much of an increase should occur.
Both Mr. Weale and Mr. Dale voted for a slight increase to the rate of 0.25 per cent which would have brought the current 0.5 per cent rate up to 0.75 per cent. Mr. Sentance voted for his usual request to have the rate increased by double to 1.0 per cent. The minutes not only showed that there was more movement to an increase but also that those that restrained from an increase would consider to vote for a change if the economy grew enough to sustain a rate hike.
The minutes said: “Most members agreed that the balance of risks to inflation in the medium term relative to the target had moved upwards in recent months and that the case for withdrawing some of the current exceptionally accommodative monetary policy had consequently been strengthened.”
It was considered that there would possibly be more members joining in for a vote to change the rate when the Bank’s Governor Mervyn King stated in reference to the February meeting that the members of the MPC were unusually divided. Had there been odds set to who would join the vote it might have been considered that Bank Deputy Governor Charles Bean would have done so. He recently had commented that the impact of higher oil prices could push inflation to a point that an increase would necessitate a rate change.
Inflation is currently at 4 per cent which is double the Bank’s goal of 2.0 per cent. Oil prices have been rising due to the unrest in Egypt and Libya. In the days ahead not only will oil prices have an impact on inflation but continued influence from public spending cuts and tax increases will be playing out against inflation. How close the MPC will get to an increase in the March meeting will be estimated as economists watch both the growth of the economy as well as inflation influences.
There was also a call to increase the Bank of England’s program for quantitative easing as Adam Posen repeated his call for a £50bn expansion to the asset purchases to £250bn pounds.
Related posts:
- MPC Votes to Keep Rate Steady, But Changes May Come in 2011
- Newest Member of the Bank’s Rate Regulation Committee Views Increase a Necessity
- Bank of England’s Monetary Policy Committee Leaves Base Interest Rate and Quantitative Easing Unchanged in Start of 2011
- Bank of England Leaves Base Rate at Record Low for Another Month
- Central Bank Holds Base Rate at 0.5 Per Cent
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