SMPC votes to raise interest rates - 1st April 2007

SMPC votes to raise interest rates by 0.25% by eight votes to one. Two members want 0.5% increase.

Six SMPC members voted to raise Bank rate by 0.25% on 5 April, two wanted the shock therapy of a 0.5% increase, and one voted for a 0.25% reduction because of concerns about the US property shakeout amongst other factors. There was a discussion amongst the proponents of a rate increase as to whether it was better to wait until the 10 May MPC decision, when a new set of Inflation Report forecasts would be available, and as the financial markets seem to be expecting. However, the dominant view was that Bank rate should have been raised last month, if it were not for the transitory period of stock market weakness then occurring, and that it was now appropriate to make up for lost time.