Rate rise supported by third Bank of England policymaker

Posted on February 25th, 2011 | Categories - News

One more MPC  policymaker has voted to raise interest rates.

Following the poor UK inflation figures Spencer Dale is now supporting an interest rate rise.

Another member of the Monetary Policy Committee (MPC) has voted for an interest rate rise, adding to the existing tally of policymakers who now support a rate hike.

Spencer Dale has joined the ranks of fellow members Andrew Sentance and Spencer Dale who have been calling for a rise for months. However, six of the remaining policymakers at February’s meeting voted to keep the rate at the historic low of 0.5%.

Latest figures show that the Consumer Prices Index rose by 4% in January, which is double the target set by the Bank of England. Experts have warned that an interest rate rise is needed to curb inflation and prevent it from escalating further.

Both Mr Weale and Mr Dale voted to raise rates to 0.75% where as Mr Sentance called for rates to increase to 1%.

Adam Posen, another member of the MPC, voted for more quantitative easing. He called for the amount of money being injected into the economy to rise from £200 billion to £250 billion.

Despite the rising disagreement within the Committee, the British Chambers of Commerce said: “Since there is no evidence that inflationary expectations are increasing and wage pressures are still modest, we believe that there is no need for the MPC to react immediately”.

It added: “While we accept that interest rates will have to increase later in the year, we believe the MPC should wait until the economy has absorbed the initial impact of the Government’s deficit cutting plan”.