Belfast Telegraph

Interest rate jump division emerges

By John-Paul Ford Rojas

Bank of England policymakers are divided over whether an early interest rate hike will derail recovery, with "striking" weak wage growth leading to calls for caution.

Minutes of their latest meeting showed the nine members of the Bank's Monetary Policy Committee (MPC) voted unanimously to keep rates at 0.5% earlier this month but analysts said their discussion revealed the intensifying debate over the timing of a rise.

Some toyed with the idea that Britain might be ready for an early rate hike experiment but the minutes also suggested more weight could be put on weak pay data which presents a more pessimistic view of the economy's strength.

The document showed some MPC members felt the risk of a hike "derailing the expansion" had receded as the economic recovery became more established.

They argued that a rise at a time when the economy was growing would allow their subsequent upward path to be gradual.

It would also help policymakers to see how households, businesses and markets would react to a rise after a long period during which rates have been unchanged.

Belfast Telegraph