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Second MPC member votes to raise rate

The Bank of England’s monetary policy committee appears to be edging closer to a rise in bank rate, according to its minutes for January.

MPC member Martin Weale joined Andrew Sentance in voting for a 0.25 per cent increase.

Adam Posen voted to leave rates on hold and increase the bank’s quantitative easing programme by £50bn.

Six members of the committee were in favour of leaving monetary policy unchanged.

The bank says short-term inflation has exceeded its expectations. The latest figures put inflation at 3.7 per cent.

But it did not change its majority view that economic headwinds and “spare capacity”, exacerbated by Government spending cuts, would force inflation down in the medium term.

The MPC said, however, “a small increase in bank rate at this meeting would still leave monetary policy highly accommodative and would not preclude the committee from increasing the policy stimulus in future”.

Crown Mortgage Management chief operations officer Julien Holmes says: “Growth is fragile at the moment but low rates could do just as much to reduce GDP as higher ones. Concerns over inflation and declining living standards are at the core of many consumers’ concerns about the economy, so tackling inflation must be the number one goal.”

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