22 June 2005
The impetus towards a cut in interest rates was notched up a peg today as it was revealed that two members of the nine strong Bank of England Monetary Policy Committee (MPC) had voted for a reduction in base rates.
No member of the MPC has voted to cut rates since July 2003 when they fell from 3.75 per cent to 3.50 per cent. Analysts are now divided on when the MPC will readjust the rate downwards, with estimates ranging from July to October.
"This is a far more dovish set of minutes than expected, and the fact that two members of the MPC voted for a rate cut suggests that an interest rate reduction as early as August is now highly likely. Indeed, July could new even be a possibility," Howard Archer of Global Insight told the Times.
"The MPC is clearly more pessimistic about the near-term growth outlook, but still has some lingering concerns about inflation risks. Much will obviously depend on the strength of consumer spending in the near term."
Interest rates have remained in their current position since November 2004 following five rate rises.
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