Two MPC members voted for immediate rate rise

TWO members of the Bank of England’s Monetary Policy Committee voted unsuccessfully for an immediate further quarter-point rise in UK base rates this week, it emerged yesterday.

Ian Mccafferty and Michael Saunders were outvoted by the other seven members of the MPC, including Bank of England Governor Mark Carney, who all opted to hold UK base rates at 0.5 per cent.

The MPC raised rates by a quarter-point from their record low of 0.25% in November.

With the MPC having signalled further rises are likely to be needed to bring inflation back to target, economists have been highlighting the possibility of another increase in the benchmark cost of borrowing in May. This would coincide with publication of the MPC’S next quarterly inflation report, and minutes of the committee’s meeting on Wednesday, published yesterday, fuelled this expectation on timing.

The MPC had voted unanimously in December and February to hold base rates at 0.5%.

Referring to the views of Mr Mccafferty and Mr Saunders, the minutes state: “These members noted the widespread evidence that slack was largely used up and that pay growth was picking up, presenting upside risks to inflation in the medium term.”

Setting out the views of the majority, the minutes declare: “The May forecast round would enable the committee to undertake a fuller assessment.”