Two MPC members vote for rate rise in January

by Aaron Strutt

Jan 31 2011

Two member of the Bank of England's Monetary Policy Committee voted for an interest rate rise in January's MPC meeting.

Minutes from the meeting reveal that Andrew Sentance and Martin Weale both voted to increase Base Rate by 0.25%.  Adam Posen preferred to maintain the cost of borrowing at 0.5% and increase the size of the asset purchases programme by £50 billion, to a total of £250 billion.

Vicky Redwood, senior UK economist at Capital Economics, is quoted at saying: "January's MPC minutes suggest that the Committee was edging closed towards a near-term rate hike. However, the GDP figures could well dissuade the waverers from rushing in to premature policy tightening.

"What's more, some members are still convinced that policy should not be tightened. For now, then, we still expect rates to stay on hold this year - and even if we do see a rate hike, it might have to be quickly reversed if the economy is as weak as we expect."

The latest figures from the Office of Nationals Statistics show that the UK's economy suffered a 0.5% quarterly drop in Q4. This follows growth of 0.7% in Q3 and 1.1% in Q2 of 2010.

Janurary 31, 2011