20
Aug
Rate rise fears may fade as Besley stands alone
The chances of the Bank of England's monetary policy committee
(MPC) raising the base rate in response to increasing inflation may
be fading after it was revealed today that there was no increase in
support for such a move this month.
Minutes of the August MPC meeting showed that the nine members all
voted exactly the same way as they did in July, leaving Professor
Tim Besley as the sole advocate of a 5.25 per cent rate.
The fact that Professor Besley has not persuaded any of his
colleagues to adopt his position may indicate that the MPC is
willing to sit tight and let inflation pass its peak.
If this is the case, the next move may be downwards as inflationary
pressures start fading in the latter part of the year, raising the
prospect of a monetary boost for the economy and property
market.
Earlier this week Professor Besley wrote in the Sun that in his
view a rate cut could lead to a return of 1970s-style
inflation.
