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MPC swings 7-2 in favour of keeping rates at 0.5%

The Bank of England’s Monetary Policy Committee has swung further in favour of keeping base rate at a record-low 0.5 per cent since former committee member Andrew Sentance stepped down last month.

Minutes from the June meeting of the MPC show new committee member Ben Broadbent, who is a Goldman Sachs economist, decided against following in his predecessor’s footsteps in calling for base rate to be increased.

Last month, the nine-member MPC was split 6-3 in favour of keeping rates at 0.5 per cent, with Sentance, Spencer Dale and Martin Weale all calling for an increase.

Governor Mervyn King, Charles Bean, Paul Tucker, Paul Fisher, David Miles and Adam Posen, joined Broadbent in calling for base rate to remain at 0.5 per cent.

Posen remained the only member to call for the Bank’s quantitative easing programme to be increased, by £50bn to £250bn.

In an interview following his departure from the MPC last month, Sentance warned the BoE is in danger of losing credibility with the UK public due to its failure to tackle soaring inflation, which is currently 4.5 per cent, well above the Government’s target of 2 per cent.

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