Bank unanimous on rates freeze
ALL nine members of the Bank of England's monetary policy committee voted to keep rates on hold at 4.75% earlier this month, according to meeting minutes released today.
However, the notes cast doubt on economists' predictions that the next rise in rates would come in November, with the MPC warning of a 'greater risk of a more abrupt correction to house price inflation'.
'Further evidence of across-the-board weakness in the UK economy, and especially in the housing market, will be enough to make the Bank pause in November,' said Gavin Redknap, economist at Standard Chartered bank.
The MPC said some 'downside risks' had increased since its August inflation report, given a slowdown in the property market and amid concerns about the recovery in the US economy. It also expected that UK economic growth for the third quarter of the year would be lower than it had expected.
Despite the concern over the property market, the committee added: 'It remained highly uncertain how rapidly and by how much house price inflation would moderate, or indeed if it might pick up again for a time.'
The committee also said it was 'puzzled' that wage rises had been slow given 'continued robust output growth and the apparently tight labour market'.
Evidence of the cooling property market has emerged in recent weeks. The Royal Institute of Chartered Surveyors said yesterday that house prices had fallen for the first time in more than a year, while lender Halifax has reported values edged 0.6% lower in August.
The MPC's ultimate aim is to control inflation with interest rates. The Consumer Prices Index currently shows an annual rate of 1.3%, safely below the committee's Government-set target of 2%.
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