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Bank of England ‘finely balanced’ on interest rates

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
21/05/2015

Two of the nine people who make up the Bank of England’s Monetary Policy Committee are ‘finely balanced’ over whether to raise interest rates.

The Monetary Policy Committee (MPC), which decides whether the Bank should increase interest rates, released its latest minutes which revealed two members are poised to vote for a rate increase.

It described their position as ‘finely balanced’ between raising rates and keeping them at their current level of 0.5%.

Ultimately all nine members voted to keep the interest rate at current levels.

All nine also agreed that rates would likely rise within the next three years.

“While there was a range of views over the most likely future path for Bank Rate, all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period,” the minutes said.

Elsewhere in the minutes it said that inflation was expected to remain close to 0% in the short-term as drops in food, energy and other prices were likely to continue.

It also warned that house prices were likely to increase as demand continues to outstrip supply.

“Mortgage approvals for house purchase had remained broadly flat, at around 61,000 per month in 2015 Q1,” it said.

“The average of the lenders’ house price indices had increased by 1.3% in April, a bigger rise than had been expected. Provisional data from the RICS survey for April had indicated that secondary housing market supply had continued to fall relative to housing demand.

“The net balance for new buyer enquiries had risen and that for new instructions to sell had fallen. This could indicate upside risks to house prices in the second half of 2015.”