![]() ![]() Significantly, the minutes showed that the MPC had been told in advance that consumer price inflation would register 3.7 per cent. “However, reported surprise drop in the fourth quarter makes a near-term rate hike unlikely, in our view.” “The meeting took place against a backdrop of heightened inflation concerns, and the minutes reveal more of an appetite by the MPC to tighten policy in response to high headline inflation than we had thought likely. Simon Hayes, economist at Barclays, said the tone of the minutes was unexpected. “There would have been a real chance of a February hike that would only have been held back by the opposition of the governor.” “It is the first time that two members have voted for a hike since they last raised rates in July 2007,” said Philip Shaw, economist at Investec. ![]() The rest have been taking a wait-and-see stance. Up to now, it has been split 1-7-1, with Mr Sentance supporting a rate rise and Adam Posen calling for further quantitative easing. That, combined with a speech by Mervyn King on Tuesday in which the Bank of England governor staunchly defended the MPC’s stance on rates and said the recovery would be “choppy”, had led to expectations that the first moves to tighten policy are some way off.īut the minutes of the meeting have caused economists to reappraise the balance of views within the MPC. ![]()
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