MPC unanimous on rate decision
Share
The Bank of England’s Monetary Policy Committee were all in agreement to keep Bank base rate on hold and continue with the £200bn quantitative easing programme.
Minutes from the MPC’s meeting earlier this month show that the committee was aware that the annual rate of inflation would overshoot its 2% target “in the early part of 2010 and remain elevated for several months.”
Data from the Office of National Statistics released yesterday revealed that the Consumer Price Index rose to 9% in December, up from an annual rate rise of 1% in November.
The Committee says that the impact of the increase in VAT from 15% to 17%, as well a potential hit to energy prices because of the cold weather, pointed to inflation spiking higher above 2% in the short-term than the MPC had previously thought.
The MPC also says that the UK economy had begun to expand again, though the recovery was still weak. But it adds that there are still “powerful headwinds impeding the recovery”, including constrained lending, more cautious behaviour among households, and investment unlikely.
The Committee also argues that fiscal consolidation is needed, but says it is unclear how to go about this and at what pace.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
