SMPC votes to hold interest rates

SMPC votes to hold interest rates by seven votes to two

In its latest monthly E-mail poll the IEA Shadow Monetary Policy Committee (SMPC) voted by seven votes to two to leave UK Bank Rate unchanged at its current 5.25% on Thursday 6th March. The two dissenters from the majority vote both wanted to cut the official discount rate by 0.25% (to 5%) on this occasion.

Looking further ahead, both the SMPC rate cutters had a bias towards further rate reductions, while three of the holders had a neutral bias thereafter, two had a bias to cut, one was prepared to cut - but only if the credit crunch worsened - and one ‘hold’ had a bias to tighten. Virtually all the SMPC members involved expressed concern about the problems that had arisen in the global market for credit, but a number also pointed out that the putative UK recession appeared to be everywhere, apart from in many of the official statistics for the domestic economy. There was also a substantial minority who felt that earlier policy mistakes, which had meant that UK monetary policy had been too lax for too long, meant that a further reduction in Bank Rate was not appropriate.

Invest in the IEA. We are the catalyst for changing consensus and influencing public debate.

Donate now

Thank you for
your support

Subscribe to