The Bank of England released their Monetary Policy Committee (MPC) meeting’s minutes today which included members votes on interest rates, which tends to be the most important part of the minutes.
MPC members voted 7-2 to keep rates at 0.5 percent, as they did in June. BoE chief economist Spencer Dale and external member Martin Weale are the most prominent members in favour of a rate hike and indicated this in their vote, while at the opposite end of the spectrum Adam Posen repeated his call for more quantitative easing.
Basically the MPC judged overall that the sluggish British economy (proven by a series of weak economic data) had reduced the chance that interest rates would need to rise in the near term.
“Recent developments had reduced the likelihood that a tightening in policy would be warranted in the near term,” the minutes noted.
This included developments in the Euro zone, mainly the debt crisis and funding costs faced by major UK banks.
Despite inflation being above the Bank’s target 2%, there is no rush to raise rates. UK inflation is double the Bank’s target at 4.2%, though this was attributed to temporary factors due to elevated energy costs and the majority of policy makers remained confident that inflation would fall back to target in the medium term.
The BoE minutes usually also include latest Asset Purchase Facility votes, but unlike last month, the minutes made no explicit mention that any member other than Adam Posen had mulled the need for further asset purchases.
Investors have recently dismissed expectations an interest rate rise until the second half of 2012, and some believe rates could stay at their record low for a good deal longer.