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(CEP News) - The Bank of England's Shadow Monetary Policy Committee is split over the Bank of England's next monetary policy move, with five members opting for a hold and four members opting for rate cuts.
Of those voting for lower rates, two wanted 50 bps cuts to the benchmark interest rate, while the other two opted for less aggressive 25 bps rate cuts. "Members of the SMPC remained concerned by the problems that had arisen with sub-prime lending. However, whilst some members wanted a reduction in interest rates, others expressed the view that interest rates were not an effective tool for dealing with the serious problems in the UK banking sector," said David Smith, Chair of the SMPC, and economics editor of the UK Times. "Furthermore, a number of members felt that loosening monetary policy could damage the Bank of England's credibility given the serious inflationary pressures in the economy," he added. The Bank of England's Monetary Policy Committee will make its decision on Thursday and is expected to hold rates unchanged at 5.00% by both economic and market participants. By Erik Kevin Franco,
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, edited by Cristina Markham,
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