Minutes from April’s Monetary Policy Committee meeting reveal the MPC is still split 6-3 on whether to raise interest rates with Spencer Dale, Andrew Sentance and Martin Weale continuing to call for an increase.
Sentance called for a 0.5 per cent increase, while Dale and Weale called for a 0.25 per cent rise. The remaining six voted for the rate to remain at 0.5 per cent.
Base rate has been held at a record-low 0.5 per cent for the past two years, with the last change being a 0.5 per cent reduction from 1 per cent to 0.5 per cent in March 2009.
Eight members of the MPC voted to keep the Bank’s programme of quantitative easing at £200bn, but Adam Posen, who has called for the bank to increase QE before, preferred to see the programme increased by £50bn to £250bn.
The MPC says: “For three members, the argument for removing some of the monetary stimulus at this meeting remained persuasive. For them, the upside risks to the outlook for inflation in the medium term from global inflationary pressures, and the possibility that inflation expectations would increase, continued to outweigh the downside risk that the strength of the recovery would be insufficient to eat into the economy’s persistent margin of spare capacity.”
In terms of inflation, the minutes says: “It was likely to remain well above the 2 per cent target for much of 2011.”
Andrew Sentance, who leaves the committee at the end of May, will be replaced Goldman Sachs’ managing director Ben Broadbent at the beginning of June.