SMPC votes for interest rate rise - 5th November 2006

SMPC votes seven to two for an increase in interest rates

Media Release

Not for publication before: 00.01 hours Monday 6th November.

Shadow Monetary Policy Committee Votes to Raise Interest Rates Further

At its latest meeting, the IEA’s Shadow Monetary Policy Committee (SMPC), a group of leading monetary economists that monitors developments in UK monetary policy, voted to raise interest rates by seven votes to two. No members voted to reduce interest rates and two of the members who voted for a rise would have preferred a 0.5% rise.

Many members were increasingly worried about sustained increases in the measures of monetary growth, particularly broad money. SMPC Chairman, David B. Smith commented that broad money was growing rapidly and the economy was demonstrating all the indications of an excess supply of money. As a consequence, he believed that there was now an overwhelming case for raising interest rates by 0.25% and that further increases would probably be needed subsequently. Gord