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Blanchflower the lone dissenter as MPC voted 8-1 to hold bank rate

Bank of England monetary policy committee members voted 8-1 in favour of maintaining bank base rate in January.

Minutes from the MPC January meeting reveal that only David Blanchflower voted against maintaining rates, preferring a 0.25 per cent reduction.

The minutes say: “For most members, no change in bank rate was necessary this month. The short-run inflation outlook had worsened markedly. A second period during which inflation was significantly above target, so soon after the one in spring 2007, might be more likely to lead people to revise up their expectations of future inflation, particularly if the rise in inflation persisted for longer.”

Blanchflower argued that the outlook for UK-weighted global demand had materially worsened, especially in the US. He said there was little likelihood that wage-bargainers would seek higher awards if CPI inflation increased temporarily, jud-ging by the recent behaviour of pay awards.

He felt that a further cut in base rate was therefore warranted and would be consistent with financial market expectations.

But the majority of members felt movements in the yield curve and the depreciation of sterling had already provided some further monetary easing.

The minutes say: “Reductions in bank rate in two successive months might, given the current conjecture, encourage observers to think that the committee was focused more on stabilising demand than meeting the inflation target and so shift the yield curve down further.”


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A&L secures funds but faces £185m hit

Alliance & Leicester says it now has enough funding in place until the end of 2008. In a statement, the lender reveals it faces a £185m hit over the credit crunch, up from £55m last November.

Purnell takes over Work and Pensions

Former Culture Secretary James Purnell has become the fifth Work and Pensions Secretary in three years following the resignation of Peter Hain.Hain quit the Cabinet last week after his late declaration of £103,000 in donations became the subject of a police investigation.Purnell was minister for pension reform before becoming Culture Secretary in Prime Minister Gordon […]

Brokers hang on with remortgages

Robert Sterling managing director Kevin Duffy says business levels are down by 20 to 40 per cent from last year.He says: “The only thing sustaining brokers is their remortgage book. The important question is whether these businesses can get to April with enough capital to support them. When we get to April, I think the […]


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