Belfast Telegraph

Interest rate held over Greece

By John-Paul Ford Rojas

Bank of England rate-setters edged closer to a split vote on raising interest rates this month but policymakers leaning towards a hike were held back amid the Greek debt crisis.

The pound rose sharply after the Bank published minutes of the latest meeting of the Monetary Policy Committee, which was held before agreement was reached on the latest Greek bailout package.

All nine members of the committee voted to leave interest rates on hold at 0.5%, where they have remained for more than six years.

The minutes showed that so-called hawks who felt that a rate hike might be needed as rising wages risk pushing inflation up were swayed against a change due to the Greek debt saga.

For these members, "uncertainty caused by recent developments in Greece was a very material factor in their decisions", according to the minutes. "Absent that uncertainty, the decision between holding Bank rate at its current level versus a small increase was becoming more finely balanced," the minutes added.

The Bank has pencilled in an upturn in UK growth for 0.7% for the second and third quarters of this year, after it slowed to 0.4% in the first three months of 2015.

Belfast Telegraph