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MPC doves in ascendancy

Speculation that the MPC will cut interest rates in the first quarter next year was fuelled today, by the release of the minutes of the last committee meeting. The document shows that seven members of the committee voted to keep rates on hold at 6%, where they have been for the last ten months.

However, the big news is that two of the committee members actually voted for a reduction in the rate. This is the first time that any member of the committee has favoured such a move in the last 18 months, stretching back to June 1999.

All members of the committee shared concern about the extent of a global economic slowdown and the potential impact that this could have on the British economy. This was enough for two of the members to vote in favour of a reduction:

"To cut rates would be a pre-emptive move which would help sustain business and consumer confidence in the event of spill-over effects from a deteriorating international environment," it was argued in the minutes.

However, mixed news on the UK economy, with buoyant household consumption, finely balanced inflationary pressures, and slowly growing government consumption lent the remainder of the committee to a rather more conservative view.