| CATEGORY: NEWS AND ANNOUNCEMENTS |
BoE split 8-1 again on rates |
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Wed 22 Feb 2006
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LONDON (SHARECAST) - For the third consecutive month the Bank of England was split 8-1 on its decision to keep interest rates on hold at 4.5% in January.
Stephen Nickell was once again the lone figure, voting for the third time to reduce the base rate by a quarter point while the other eight members voted to hold rates for now.
The bank said recent data seems to suggest that UK output growth increased in the fourth quarter, reflecting the strength of services and a turnaround in energy production making the earlier slowdown appear relatively shallow.
The latest indicators and surveys had pointed towards a gradual strengthening of GDP growth as the most likely central case, added the BoE.
The Monetary Policy Committee also noted concerns that a reduction in interest rates at this stage would provide further support to the housing market and consumption at a time when GDP growth was already strengthening.
Such a move could consequently increase the probability of inflation rising above target in the medium term.
The minutes dampen down expectations of an imminent rate cut coming on the back of last week’s Quarterly Inflation Report at which the Bank said inflation is expected to stick close to its 2.0% target.
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