BoE breakdown of the Monetary Committee’s stall at 5%

The minutes from the Bank of England’s revealed that policymakers voted by 8-1 to keep interest rates unchanged, with only David Blanchflower backing further cuts.

The bank did not want to give the impression of backing output and economic growth over inflationary targets.

The minutes of the meeting on the 7th and 8th of May show that most of the Monetary Policy Committee would cut interest rates from 5 percent, had inflation have shot up in April beyond 3 percent.

The Governor, Mervyn King, said that inflation may exceed the government’s 3 percent ceiling and indicated that at this current moment in time, the bank had little elbow-room to continue to cut rates further considering the three successive cuts.

The focus on the bank now is aimed squarely at consolidating the risks posed by further sharp increases in consumer prices and aiming to avoid the economy slipping into recession.

Inflation is, however, still a grave concern and an issue that is hampering the bank at a time where consumers and household budgets are also coming under severe pressure.

The BoE still has the highest benchmark rate of the Group of Seven nations as the US Federal Reserve cut their rate to just 2 percent whilst the European Central Bank has kept the benchmark at 4 percent.

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