At its latest meeting, the IEAs Shadow Monetary Policy Committee, a group of leading monetary economists that monitors developments in UK monetary policy, voted against changing interest rates by seven votes to two when Britains REPO rate is next set, on 4 May.
Most members of the SMPC felt that the arguments for and against a change in interest rates were finely balanced. There has been a significant rise in energy prices, but overall inflation was still subdued. Against this, there is evidence that economic activity is recovering again, while the continued high level of UK money supply growth concerned a number of members. There were few risks arising from the international economic background unless energy prices continued to rise.
Although the majority of members voted for no change in interest rates, and no members voted for an immediate increase, several members felt that interest rates would have to rise in the future, as a result of the medium-term impact of rapid broad money growth.
Tim Congdon said The choice is between a modest rise in rates now or a more drastic one later