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Bank of England minutes show three way split

Bank of England minutes show three way split

Category: Economy

Updated: 18/11/2010
First Published: 17/11/2010

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 It is now over 6 months old so the content may be out of date.

Minutes from the Bank of England's latest meeting have revealed a three way split in opinion between policymakers.

The Monetary Policy Committee (MPC) meet at the beginning of every month to mull over the current economic conditions and to decide whether interest rates should be altered.

Since quantitative easing began last year, they have also been charged with deciding whether to enlarge the programme or make no change.

The committee has been responsible for keeping the base rate of interest at its historical low point of 0.5% since it was cut in March last year.

Until recently, the MPC had unanimously voted to keep the measure at its current point.

That has changed in recent months, however, as Andrew Sentence has repeatedly voted for a slight rise in the rate, from 0.5% to 0.75%.

This month was no different with Mr Sentence recommending a rise, although he found himself in the minority as all other eight members voted to maintain interest rates at 0.5%.

In addition to this, another member of the MPC, Adam Posen, voted in favour of increasing the economic stimulus by £50 billion to £250 billion.

The minutes of the meeting also revealed that the MPC expect inflation to remain stubbornly high in the short term.

"In the near term, inflation would remain elevated on account of the increase in the standard rate of VAT to 20% in January 2011," the committee said.

"Some utility price rises for December have also been recently announced; these too would add to inflation in the near term, particularly if other suppliers followed suit and raised prices."

Since the meeting, CPI inflation has risen from 3.1% to 3.2% and British Gas has announced a 7% rise in energy costs to begin next month for many of its customers.

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