Belfast Telegraph

Bank chiefs split on rate policy vote

By Holly Williams

Bank of England policymakers were split over the latest interest rates decision for the first time in more than a year amid fears of persistent inflation.

Minutes of the June rates meeting showed a surprise seven to one vote after Monetary Policy Committee (MPC) member Andrew Sentance said the cost of borrowing should rise by 0.25%.

Rates were kept on hold at their historic low of 0.5%, but the revelation of a disagreement among the MPC - the first on rates since February 2009 - highlighted increasing concern at stubbornly high inflation.

The vote result sent the pound higher, up 0.6% to $1.49 and 0.5% to €1.21.

The MPC has been unanimous in keeping rates on hold for many months, but the threat of above-target inflation has increasingly become a cause of concern among some members.

The minutes showed that Mr Sentance believed the wider economic conditions were failing to dampen inflation.

According to the minutes, he deemed the momentum of recovery so far to be enough to create slack to absorb a rate hike.

"Despite current uncertainties it was appropriate to begin to withdraw gradually some of the exceptional monetary stimulus provided by the easing in policy in late 2008 and 2009," he wrote.

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