Minutes reveal MPC member voted to increase rate
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The minutes from June’s Monetary Policy Committee show one member voted in favour of increasing the Bank Base Rate by 0.25%.
Seven members of the committee - the governor, Charles Bean, Paul Tucker, Spencer Dale, Paul Fisher, David Miles and Adam Posen voted in favour of the proposition. Andrew Sentance voted against, preferring an increase in Bank Rate of 0.25%.
Vicky Redwood, senior UK economist at Capital Economics, says Sentence’s vote to raise rates by 0.25% was unexpected, but not a complete surprise.
She says: “Admittedly, some other members also thought that the balance of risks to inflation had moved to the upside. But others thought that recent market developments meant that the risks had shifted to the downside.
“And news since the meeting should have calmed inflation nerves somewhat. For a start, CPI inflation itself fell from 3.7% to 3.4% in May. Meanwhile, the fact that the VAT rise is delayed until next year avoids a further spike in inflation in the near-term, and hence reduces the risk of a rise in inflation expectations.”
She says the large tightening in the Budget will, other things equal, pull down the MPC’s inflation forecast which was still based on the previous fiscal plans.
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