17
Sep
Rate rise advocate changes stance
The solitary advocate of a rise in the Bank of England base rate on
the monetary policy committee (MPC) has altered his position.
Publication today of the minutes of the September MPC meeting
revealed that Tim Besley, who voted to raise the rate in July and
August, supported the majority in holding the rate this
month.
David Blanchflower maintained his position of voting for a 0.25 per
cent cut.
The shift in Professor Besley's position may increase the
likelihood that the next change in the base rate will be down
rather than up, which could help lower the cost of mortgages.
According to the Bank's governor Mervyn King, the rate of consumer
prices index inflation is likely to peak soon at around five per
cent and will then fall back.
Mr King's thoughts were expressed in a letter to chancellor
Alistair Darling and match the analysis of other economists such as
Howard Archer of Global Insight.
Mr Archer said: "This should allow the Bank of England to bring
interest rates down to 3.5 per cent in 2009, regardless of whether
it starts cutting this year, or delays acting until early
2009."
