MPC rate rebel will get onside soon, says Boulger
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Monetary Policy Committee member Andrew Sentance will stop voting for a rise in interest rates in the coming months, John Charcol predicts.
The minutes of the MPC’s July meeting show that Sentance voted to increase the Bank of England base rate for the second time running to 0.75% as inflation is not meeting the government’s 2% target.
But Ray Boulger, technical director at John Charcol, says he does not think Sentance is having a significant influence on the MPC.
He says: “I think he’s wrong to vote for a rise and if he was going to influence the rest of the committee he would have done so by now.
“The fact that he has been the only member voting for a rise two months on the trot shows the others are unlikely to follow him, and I suspect he will soon join the rest in voting to keep rates at 0.5%.”
All other seven members voted in favour of maintaining the base rate at 0.5% for the 16th month running.
The minutes state: “For one member it was appropriate to start to withdraw some of the exceptional stimulus provided by the easing of policy in 2008 and 2009.”
In May the Organisation for Economic Co-operation and Development called for interest rates to be 3.5% by next year.
It says: “The gradual drift up of some measures of inflation expectations implies a need to increase rates earlier than thought, and no later than Q4 2010.”
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