Hold interest rates was the opinion of the IEA's Shadow Monetary Policy Committee (a group of leading economists that meets to monitor monetary policy and comment on other monetary matters) which voted by seven votes to two to hold interest rates at its January meeting. One member voted for an increase and one member voted for a decrease.
Members of the SMPC felt that there had been insufficient time to appraise the results of recent interest rate increases by the Bank of England. It seemed clear that the housing market was slowing and inflation was at the bottom of the target range but monetary growth was still strong. The international and UK economic situation also sent contradictory messages. Some members felt that domestic considerations alone would suggest that a rate rise was warranted but the international outlook was weaker.
Whilst members wished to see the results of recent increases in interest rates, many members did feel that action might have to be taken later in the year.
John Greenwood, (Chief Economist, AMVESCAP) said that, although inflation is currently below target,