Shadow MPC Votes to Hold Interest Rates - 1st October 2005

SMPC Votes six to three to hold rates

Ahead of the Bank of England's interest rate announcement later this week, a majority of the members of the IEA Shadow Monetary Policy Committee believe that interest rates should remain unchanged.

John Greenwood, Chief Economist at AMVESCAP commented, "In summary, with the economy still growing close to trend rates, demand pressures mixed and cost pressures strong, there is no margin for further easing. Rapid money growth rates imply a risk that demand could strengthen again, reigniting inflation. This leads to the conclusion that rates should not be cut, but held at the current level." However, Tim Congdon wanted a rate rise, warning that the annual rate of increase in the consumer price index could exceed 3% and require the Governor of the Bank of England to write an Open Letter of explanation to the Chancellor.

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