The minutes of the meeting show that the majority of members considered the outlook and the balance of risks on the MPC’s central projection for inflation warranted a 0.25 per cent reduction. They said that such a cut would be consistent with market expectations of a gradual easing of bank rate and reduce the risk of a sharp slowdown in demand later in the year.
Blanchflower argued that a bigger reduction was req-uired due to the concern over a marked slowdown in domestic activity based on forward-looking surveys.
Besley and Sentence put the case for no reduction and said inflationary pressures from rising output costs were spreading beyond the energy and food sectors and there was a danger that higher inflation expectations would persist. They warned that a cut might sustain higher inflation expectations.