MPC was split over rate cut


Wed 23rd Apr, 16:49:20 BST

The minutes from the latest meeting of the Bank of England''s Monetary Policy Committee (MPC) shows a split vote.

MPC members voted in favour of cutting the base rate of interest in April, bringing it down from 5.25 per cent to five per cent.

However, the split between MPC members appears to suggest that another rate cut will not be announced in May.

Two members voted in favour of maintaining interest rates, one called for a larger reduction and the other six voted in favour of a 0.25 percentage point cut.

Howard Archer, economist at Global Insight, said that a May reduction is unlikely but not out of the question.

"We forecast the next 25 basis point cut to 4.75 per cent to occur in June, but would not rule out a May cut at this stage - particularly if credit conditions tighten further and the economy shows increasing signs of faltering," he commented.

"Further out, we anticipate that interest rates will fall to 4.25 per cent by the end of 2008 and to four per cent in the first quarter of 2009 as extended below-trend growth increasingly undermines companies'' pricing power and limits wage growth," added Mr Archer.ADNFCR-1143-ID-18564992-ADNFCR


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