IoD press release MPC makes narrow vote to hold rates at 4%
Commenting on the decision of the Monetary Policy Committee of the Bank of England to hold interest rates to 4.0%, Anna Leach, Chief Economist at the Institute of Directors, said:
“The MPC voted once again to hold Bank Rate at 4%, but with a narrower 5-4 split this time, reflecting the tight balance of risks. For the doves, stronger disinflationary pressures and downside risks dominated, amidst concerns over the outlook for consumption. Meanwhile the hawks are worried about inflation persistence and second-round effects. Although the Governor voted for a hold this time, he made it clear that this was mainly to await more evidence of disinflation.
“It’s odds-on for a rate cut in December, provided inflation continues to track down – and the Bank think it will, projecting CPI at 3.6% for October. Even a deftly designed Budget will unleash a sizeable fiscal consolidation, pushing down further on demand and price pressures. A pre-Christmas rate cut would be welcome news for businesses and consumers.”
