June 22, 2006	Thursday	Jumadi-ul-Awwal 25, 1427

LONDON, June 21: Bank of England (BoE) rate-setters voted 7-1 to keep British borrowing costs at 4.50 per cent earlier this month, minutes of their most recent meeting showed on Wednesday.

Policymaker David Walton was the only member of the central bank's Monetary Policy Committee (MPC) to call for an increase in British interest rates -- repeating his call made in May.

On June 8, the BoE had frozen its key “repo” rate -- the rate at which the central bank lends to commercial banks -- for the tenth month in a row as it maintained a wait-and-see policy over the economy.

In May's quarterly Inflation Report, the BoE had predicted that soaring oil prices would help push 12-month inflation above the government-set 2.0-per cent target in the next two years, before dropping back to around target.

British 12-month inflation jumped to 2.2 per cent in May from 2.0 per cent in April, lifted by soaring domestic energy bills and rising motor fuel prices.

Given that recent developments had been broadly in line with the May Inflation Report, and that there were significant risks to the outlook in both directions, most members felt that the rate should remain unchanged this month, the BoE minutes read.

For one member, however, the balance of risks to inflation, relative to the 2.0-per cent target, were sufficiently to the upside to warrant an immediate increase in rates. May's inflation figure had breached the BoE's government-set target of 2.0 per cent -- and was the highest reading since October 2005 when it stood at 2.3 per cent.

Meanwhile the MPC's latest recruit, labour market economist Professor David Blanchflower, taking part in his first meeting earlier this month, also called for no change. The MPC was split three ways for the first time for nearly eight years at May's interest rate meeting, at which rates were also held.

The committee, which normally numbers nine members, was reduced to eight in April, May and June after senior member Richard Lambert left his post on March 23 ahead of becoming later this year the new head of the Confederation of British Industry -- the country's biggest employers body.

Interest rates in Britain were last cut from 4.75 pc in August 2005 to the current level owing to subdued economic growth.—AFP