Mar 16, 2017
Bank of England keeps UK interest rates on hold as it warns on inflation
Monetary policy committee votes 8-1 to keep rate at record low amid signs of slowdown in consumer spending
The Bank of England has held interest rates at their record low amid signs of an internal split emerging about how to tackle rising inflation. The Bank's monetary policy committee was split on the rates decision with one member, Kristin Forbes, voting to raise borrowing costs immediately. Eight members of the Bank's MPC felt that the current 0.25% base rate and electronic money-printing programme were appropriate to support the post-referendum economy amid signs that slower pay growth and rising inflation was dampening consumer spending.
Live Bank of England split over interest rates as Forbes votes to hike - business liveUK central bank leaves borrowing costs at record low, but one MPC member pushed for a rise to tackle rising inflation Read more
But Forbes, who leaves the committee at the end of June, felt that inflation "was rising quickly" and was likely to remain above the Bank's 2.0% target for at least three years. Minutes from this week's policy meeting showed Forbes also felt that "the weakness in activity expected since the referendum had not materialised" and that unemployment "showed no signs of increasing".
As such, she voted against the rest of the committee and advocated an increase in the base rate back to 0.5%. It is the first split on the MPC since the aftermath of the Brexit vote in July 2016, when Jan Vlieghe had voted for a cut in interest rates from 0.5% to 0.25%. The rest of the MPC opposed him but then voted for a cut in August 2016.
by Katie Allen