The Bank of England’s Monetary Policy Committee remains split over whether to increase base rate, with the same three members as last month calling for an increase.
Minutes from the March meeting show Andrew Sentance, who has called for an increase since last June, voted in favour of a 0.5 per cent increase while Spencer Dale and Martin Weale preferred to increase base rate by 0.25 per cent. The six remaining members voted for the rate to remain the same.
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 most recent change to the size of the programme, in November 2009, was an increase of £25bn to £200bn.
The minutes warn that there is a risk inflation might exceed 5 per cent at some point this year.
The minutes say: “Inflation had risen to 4 per cent in January, and would very likely rise further over the coming months: there was a significant risk that inflation would exceed 5 per cent in the near term. How much of the increase in January related to the pass-through of the increase in VAT was as yet unclear.”