20 Aug

Rate rise fears may fade as Besley stands alone

Rate rise fears may fade as Besley stands alone

The chances of the Bank of England's monetary policy committee (MPC) raising the base rate in response to increasing inflation may be fading after it was revealed today that there was no increase in support for such a move this month.

Minutes of the August MPC meeting showed that the nine members all voted exactly the same way as they did in July, leaving Professor Tim Besley as the sole advocate of a 5.25 per cent rate.

The fact that Professor Besley has not persuaded any of his colleagues to adopt his position may indicate that the MPC is willing to sit tight and let inflation pass its peak.

If this is the case, the next move may be downwards as inflationary pressures start fading in the latter part of the year, raising the prospect of a monetary boost for the economy and property market.

Earlier this week Professor Besley wrote in the Sun that in his view a rate cut could lead to a return of 1970s-style inflation.

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