At its latest meeting, the IEAs SMPC voted to hold interest rates by five votes to four. Three members wanted to raise rates by 1/4% and one member wanted to raise rates by 1/2%.
A number of SMPC members were concerned about the recent rise in CPI inflation to 3%, expressing the view that the Bank of England had risked its credibility by allowing inflation to rise so rapidly and by not being sufficiently active, at an early enough stage. There was therefore a general welcome for the recent rise in interest rates as it was essential that the markets continued to believe that the Bank of England would hit the inflation target. If it did not then wage settlements would begin to rise. Several of the five members who voted in favour of holding rates had a bias in favour of raising rates later in the year.