View more on these topics

Lone MPC member voted for rate increase

Just one member of the Monetary Policy Committee voted to increase the base rate at this week’s meeting.

The minutes from this week’s meeting, published today, show Ian McCafferty voted to increase the base rate by 25 basis points to 0.75 per cent.

McCafferty believed the risks of overshooting the Bank’s medium-term inflation target of 2 per cent were “sufficiently to the upside to justify an immediate increase in Bank rate”.

The minutes say: “For [McCafferty], it was unlikely much greater clarity could be achieved by waiting to see how the data evolved over the next few months, while postponing the start of the process of gradually raising Bank rate increased the risk of having to increase it more sharply later on.”

Capital Economics senior UK economist Samuel Tombs says: “It would not be surprising if one or two more MPC members joined Ian McCafferty in the coming months – the minutes emphasised that ’some members’ saw upside risks to the inflation forecast.

“But we doubt that rates will rise until the Governor changes his view – note that interest rates have never risen without the Governor voting to hike. And in his speech last month, Mark Carney stated that he wanted to see core inflation and growth in unit wage costs pick up before voting to raise rates.

“The recent strengthening of the pound and rebound in productivity suggest that those pick-ups are unlikely to be seen in the data for some time. So while the Governor’s previous capriciousness means that a 2015 hike cannot be entirely ruled out, today’s releases support our view that a majority will vote to keep interest rates on hold until the second quarter of next year.”

For the first time today, the Bank released its decision, the minutes of the decision and its inflation report in what has been dubbed ‘Super Thursday’.

Recommended

Handcuffs-700x450.jpg

Ex-trader jailed for 14 years over Libor rigging

A former UBS and Citigroup trader has been found guilty of eight counts of conspiring to rig Libor and handed 14 years in jail. Tom Hayes, a 35-year-old former yen derivatives trader, represents the first conviction over the manipulation of interest rates. In a case brought by the Serious Fraud Office, prosecutors claimed Hayes asked […]

FCA interior logo 620x430

Butler joins FCA to cover for McDermott

The FCA has appointed a new director of supervision to replace Tracey McDermott, joining on secondment from the Prudential Regulation Authority. Megan Butler will join the FCA for one year from 1 September. She is currently executive director of the PRA’s international banks directorate. Butler will replace McDermott, who is set to become acting chief […]

Book

Media Spotlight: This New Noise, by Charlotte Higgins

The British public’s relationship with the BBC has become strained in recent years under the weight of a wave of scandals within the organisation known affectionately as ‘Auntie’. That moniker itself illustrates the warmth with which the world’s leading public broadcaster is generally regarded, both in Britain and internationally. However, as one scandal has followed […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Chris Hulme 6th August 2015 at 1:23 pm

    It will be interesting to see how the MPC thinks this one through and its impact on mortgage rates…. I sincerely hope they haven’t forgotten the impending 2014 changes in IFRS9 and the balance of the EU Credit Directive which will each apply upward pressure on mortgage rates even before the MPC takes any such action….