Bank of England devided over forward guidance
The Bank of England proved to be split on keeping interest rates low over a sustained period during the MPC August meeting.
The Bank of England’s decision to keep interest rates at 0.5% until the employment rate fell below 7% was approved with eight votes against one, according to the minutes of the Monetary Policy Committee’s August meeting.
MPC member Martin Weale cast a dissenting vote on the proposal and demanded tougher conditions to ensure that the commitment to keep rates at 0.5% did not cause a pick up in inflationary pressure.
According to one of the conditions set by the Bank of England, the MPC should consider raising rates if inflation goes above 18-24 months time, while Weale favoured a shorter period.
“One member of the Committee (Martin Weale), while supportive of the adoption of forward guidance, voted against the proposition in order to register his preference for a time horizon for the first inflation knockout that was shorter than proposed,” the meeting’s minutes read.
Meanwhile, data from the Office for National Statistics showed that UK unemployment has remained steady at 7.8%.
The number of Jobseeker’s Allowance claimants fell by 29,400 last month, the Office for National Statistics report also said.
Click here to read the MPC meeting’s minutes.