Monetary Policy Committee meeting minutes released
Minutes from the Bank of England’s Monetary Policy Committee meeting were released today and they reveal the committee are split on their decision to keep interest rates on hold this month.
7 members of the Commitee voted for interest rates to remain at the current 5 per cent rate, 1 member voted for a rate increase and another member voted for a rate cut. Here are the notes of the meeting;
“Most members of the committee judged the current stance of monetary policy was broadly appropriate and that Bank Rate should be maintained at five per cent this month.
“Inflation was likely to move further above the target in the coming months. The outlook for activity growth had continued to worsen, but some build up in the margin of spare capacity was likely to be necessary to ensure that inflation returned to the target in the medium term.”
They said that cutting rates would help improve the economic downturn seen over recent months, which could also be seen as a signal that perhaps the committee are more concearned with this than tackling inflation at the moment.
The Bank of England’s Monetary Policy Committee are stuck between inflationary increases, which are usually combated with increased interest rates, and the increasing likelyhood of recession which is usually kept at bay with interest rate cuts to stimulate the economy…
So, perhaps the idea is that inflation will increase towards to the end of the year but then tail off as we move into 2009, but hopefully not a recession??