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Rates will hold for longer without Sentance

Rates will hold for longer without Sentance

Category: Economy

Updated: 22/06/2011
First Published: 22/06/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The prospect of a rise in interest rates looks to have declined yet further as minutes show a new member of the Bank of England's committee voted for a freeze this month.

Minutes from the June Monetary Policy Committee meeting show its newest member, Ben Broadbent, voted to keep rates at 0.5%.

Mr Broadbent has stepped into the shoes of a certain Andrew Sentance, a man who has consistently voted to increase the base rate, recently recommending it be doubled from 0.5% to 1.0%.

Spencer Dale and Martin Weale were the lone voices on the committee of nine who voted to nudge up rates to 0.75%.

The remaining seven all thought the current economic conditions would be better served by keeping rates on hold.

"As expected, the replacement of the inflation hawk Andrew Sentance with the more dovish Ben Broadbent has reduced the number of members voting for a rate rise by one and increased the chance of the monetary policy remaining unchanged this year," said the Centre of Economics and Business Research (cebr).

The independent body also said that it expected household budgets to be squeezed for the remainder of the year, with rising gas and electricity prices adding to the pressures.

It also warned that any rise in rates will have to be carefully considered, as such a move could push many homeowners into serious financial problems.

"A rate rise – and a subsequent rise in household mortgage interest payments – could be the straw that breaks the camel's back and the MPC is all too aware of that risk," it said.

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