BOE Votes 8-1 to Keep Rates On Hold in September

The Bank of England’s (BOE) Monetary Policy Committee voted 8-1 to keep interest rates on hold at 5.00% in September, the meeting minutes published today show.

Once again David Blanchflower voted for a cut, this time of 0.50%, but Tim Besley did not vote for a hike. The market had expected him to do so in an 8-1-1 vote split but it was not to be. So, today’s split is slightly dovish in terms of rate outlook from the Bank.

On closer examination, today’s minutes show that the MPC considered the possibility of both raising and cutting rates before deciding to remain unchanged. This open discussion highlights the difficult position members find themselves in. On the one hand there is record consumer inflation and on the other a slowing economy and increasing unemployment.

It will be very interesting to see how events since the September meeting are received by the Committee. Today we heard from National Statistics that Claimant Count Change increased by 32, 500 in August, the biggest jump since 1992. And it remains to be seen how the knock on effects of the fall of Lehman Brothers will impact the UK economy.

Related links: BOE MPC Meeting Minutes - Visual Analysis for the BOE MPC Meeting Minutes