Thursday, Nov 23, 2006

The end of the rate rises?

City A.M.: Dissent at MPC over rate rises

"HOPES that interest rates may have peaked were boosted yesterday when it emerged that two members of the Bank of England's Monetary Policy Committee voted against this month's rate rise, with deputy governor Rachel Lomax a surprise dissenter."

Posted by monty @ 08:50 AM (6572 views)
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1. monty said...

For the pdf challenged...

HOPES that interest rates may have peaked were boosted yesterday when it emerged that two members of the Bank of England's Monetary Policy Committee voted against this month's rate rise, with deputy governor Rachel Lomax a surprise dissenter.

The minutes of the November meeting showed the committee voted 7-2 in favour of raising rates to 5 per cent.

David Blanchflower's vote for steady rates came as no surprise, as he had backed no change in each of the previous five meetings. More striking, though, was that he was joined by Lomax, the deputy governor in charge of monetary policy.

George Buckley, chief economist at Deutsche Bank, said: "Lomax had in the past on two occasions voted in favour of tighter policy than the committee, but never for more lax policy until this month." Interest rate futures rallied, while sterling briefly lost ground after the news, which helped cement views among a growing number of City analysts that rates have peaked. A Reuters poll showed only eight of 47 economists are now forecasting another rate rise in the first quarter of next year $(O m(Bost likely in February $(O d(Bown from 15 predicting a hike in February a week ago.

The majority view on the committee this month was that inflation would remain above the 2 per cent target if rates were left unchanged, the minutes showed.

Economic growth is firm, leaving the economy limited room to grow without sparking further inflation, and the resurgent housing market could fuel consumer spending, the committee argued. However, it acknowledged that spending could be held back by households' rising debt burden.

But one committee member (thought to be Blanchflower) believed that the economy (continued on page 2)

Thursday, November 23, 2006 08:54AM Report Comment
 

2. inbreda said...

"HOPES that interest rates may have peaked were boosted yesterday ...."

2 dissenters is not a majority, and there is no indication that the number will rise rather than fall. What tripe.

Thursday, November 23, 2006 02:29PM Report Comment
 

3. Tipping Point said...

Does anyone really believe that the bank of england will ramp up interest rates to the extent that tens of thousands of people end up being evicted. The MPC might be independent but their existence is dependent on politicians. One the one side you have pensioners for whom interest rates can never be high enough and on the other side you have everyone else who don't give a stuff as long as their wages go up at the same rate or above the cost of living. I'm betting on high inflation and judging by the way commodities are going so is everyone else.

Thursday, November 23, 2006 02:35PM Report Comment
 

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