29 Oct

Inflation no longer a big threat, says MPC member

Inflation no longer a big threat, says MPC member

In news that may point the way to lower interest rates and consequently cheaper mortgages, a former hawk on the Bank of England's monetary policy committee (MPC) has said that the danger of higher inflation has "diminished significantly".

Professor Tim Besley said that a combination of the economic downturn, moderating prices in services and food as well as falls in commodity prices all pointed to lower inflation being a more likely prospect.

Such an outlook could help increase the chances that the MPC will cut rates again soon, particularly as Professor Besley was advocating a rate rise as recently as August.

During that MPC meeting and the previous one in July, he argued that the priority was to conquer inflation to avoid greater economic damage later on and voted for a 0.25 per cent increase.

This was in contrast to David Blanchflower, who supported a 0.25 per cent cut while the rest of the body voted through the decisions to keep the rate on hold.

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