At its 25 October meeting, the IEAs Shadow Monetary Policy Committee, a group of leading monetary economists that monitors developments in monetary policy, voted against changing interest rates by seven votes to two.
Members of the SMPC were concerned about short-term inflationary pressures arising from rising oil prices, but most members felt that now would be the wrong time to raise interest rates. A number of participants expressed concern about the medium-term outlook for inflation, particularly as the main money supply measures had been growing rapidly for some time. However, the majority of the members who took that view felt that the slowdown in the real economy would be sufficient to offset inflationary pressures. A rise in global saving and the likelihood of households reacting to their very high debt levels by reducing spending were also given as reasons for leaving rates on hold.
Two members, Peter Warburton (Director, Economic Perspectives) and Prof. Patrick Minford (Cardiff Business School) expressed fears of a potential economic slowdown and