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Rate-setting committee was split three ways

Economic indications for both a cut and a rise in interest rates caused a three-way split between members of the Bank of England's Monetary Policy Committee earlier this month.

There had not been such a split in the committee since August 1988.

Minutes of the MPC meeting published yesterday show members were split 1:1:6 with the Governor, Rachel Lomax, John Gieve, Kate Barker, Charles Bean and Paul Tucker voting for a hold at 4.5% while Stephen Nickell wanted an immediate cut and David Walton preferred an immediate increase of 0.25%.

There were only eight members this month as the Treasury had not yet appointed a replacement for Richard Lambert who left suddenly in March.

Whilst Stephen Nickell has called for a cut for the previous five months, David Walton's preference for a rate rise was motivated by evidence showing a strengthening economy and several indicators that suggested inflationary pressures would build up in the months ahead.

However, most economists don't see rates changing soon. Howard Archer of Global Insight, told The Guardian: "Although one MPC member voted for an interest rate hike in May and the committee discussed the case for an interest rate hike as well as a cut, the minutes do not suggest that the majority of the MPC are itching to pull the interest rate trigger in the near term at least."

Stephen Nickell, who had argued for a cut saying that slower consumer spending, higher energy prices and higher taxes would make the economy weaker than the Bank's central projection, has now finished his term on the MPC having been on the committee since June 2000.