All MPC wanted Feb cut
All nine members of the Bank of England's Monetary Policy Committee backed lower interest rates this month with arch-dove David Blanchflower calling for a precautionary half-point cut.
Bank cuts rates but warns on inflationMinutes of the February 6 and 7 MPC meeting when rates were cut by a quarter-point to 5.25 percent showed most policymakers were concerned that tighter credit conditions meant interest rates were still restrictive.
"Interest rates were probably still bearing down on demand partly because of higher market spreads meant that the level of Bank Rate consistent with any given monetary stance was lower than it had been before spreads had widened," the minutes said.
Analysts had predicted a 9-0 vote in favour of a 25 basis point cut but there was little in the minutes to suggest that the Bank was about to embark on an aggressive rate-cutting campaign. Most economist expect another cut by the end of June.
"The Committee needed to balance the risk that a sharp slowing in activity would pull inflation below the target in the medium-term against the risk that elevated inflation expectations would keep inflation above target," the minutes said.
But for David Blanchflower, consistently the most dovish member of the MPC, more weight should be put on the risk of a "very sharp slowdown" in UK growth. He saw similarities in recent UK data with that in the United States several months previously.
|
|
