The IEA’s Shadow Monetary Policy Committee (SMPC) has voted by five votes to four to leave Bank Rate unchanged at 0.5%, when the Bank of England’s rate setters gather on Thursday 9th September.
All four of the SMPC members who wanted an increase voted that Bank Rate should be raised to 1%. The majority on the SMPC who wished to hold Bank Rate did so for a number of reasons. These included: the slow growth of broad money and credit; the de-leveraging of private-sector balance sheets, and concern that the fiscal tightening announced in the June Budget would reduce activity once it was implemented. There was also a fear that the world recovery was running out of momentum, especially in the US where a double-dip recession seemed increasingly possible.
Several considerations explained why four members