LONDON, Nov 23: Bank of England policymakers voted unanimously to keep the cost of borrowing in Britain at 4.50 per cent earlier this month, minutes of their latest meeting showed on Wednesday.
The expected 9-0 decision to keep interest rates steady for the third month in a row, after a cut from 4.75 per cent in August, was decided at the November 9-10 meeting of the central bank’s Monetary Policy Committee (MPC).
Policymakers had voted unanimously also in September and October to keep the “repo” rate — the rate of interest at which the Bank of England (BoE) lends to commercial banks — on hold.
“The 9-0 vote and general tone of the minutes confirm that the Monetary Policy Committee is firmly in ‘wait and see mode’ at the moment,” Global Insight analyst Howard Archer said.
In making its latest decision, the MPC noted that “there were signs that output growth in the second half of the year would be a little stronger than in the first half”.
It said that “there was also considerable uncertainty about the impact of higher energy prices on inflation, both in the recent past and in the immediate future, and about the future path of energy prices”.
Publication of the BoE’s minutes came a day after the US Federal Reserve revealed that it has begun to debate when to halt a long-running campaign of US interest rate hikes.
Minutes of the central bank’s own latest meeting showed that members of the Fed’s open market committee (FOMC) believed the US economy had largely shrugged off the impact of deadly hurricanes, leaving higher inflation as a bigger threat to the economy.
At its November 1 meeting, the FOMC chaired by Alan Greenspan voted unanimously to boost the benchmark federal funds rate by a quarter point to 4.00 per cent.
The rate now stands at its highest point since June 2001, following 12 successive hikes designed to get US monetary policy back to a more “neutral” level after a 2001 recession drove rates to historic lows.
The European Central Bank meanwhile was expected to hike eurozone borrowing costs for the first time in more than five years next month.
ECB president Jean-Claude Trichet last Friday gave his strongest hint yet that interest rates in the euro area would rise soon.
The ECB has held its key lending rate at 2.00 per cent since June 2003.—AFP