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MPC unanimous on rates as it eyes inflation target

The monetary policy committee voted unanimously to keep base rate at 0.5 per cent it seeks to achieve its target inflation rate of 2 per cent.

The committee was unanimous in its vote for the second month in a row.

According to latest MPC minutes, published today, slow GDP growth in the last three months of the year and slow wage growth pushed members to vote in favour of maintaining base rate at its record low.

Latest ONS figures published yesterday showed inflation sank further in the year to January, sinking to a record-low 0.3 per cent.

The committee states that domestic cost growth, particularly wages, would have the “most enduring influencing on inflation in the medium term” .

It also noted that governor Mark Carney was forced to send a letter of explanation to Chancellor George Osborne following a decline in inflation to 0.5 per cent in December.

Further to inflationary pressures, the committee noted increased volatility in financial markets as the European Central Bank announced an £800bn programme of quantitative easing and oil price fluctuations continued.

The minutes say: “In light of the aim of reaching 2 per cent inflation…all committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting.” 

Prior to January, MPC members Ian McCafferty and Martin Weale had voted for a 0.25 per cent increase in base rate every month since August.



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