The shocking chaos in the stockmarkets earlier this week led to the US Federal Reserve slashing the interest rate in the US by 0.75%. However, the Bank of England has stated that it will not be following suit by slashing interest rates in the UK. In fact, according to a recent report and based on the minutes of the last Monetary Policy Committee meeting, the interest rate in February is likely to go down only marginally, by 0.25%.
According to the minutes of the January MPC meeting there was only one MPC member that voted for an interest rate cut last month, and therefore rates remained unchanged at 5.5%. With this in mind, experts now feel that this is a clear indication that if interest rates are cut after the February meeting – which most analysts and economists are predicting – it will only be by a quarter percent.
The minutes indicated that at last month’s MPC meeting the majority of members were more concerned about the marked risk of inflation rises in the short term, partly fuelled by rising food and energy costs. Only one member of the committee thought that the state of the economy was of greater importance, hence voting for an interest rate cut.
The news came as a surprise to many economists, who had assumed that there had been a more balanced split in the vote, with many under the impression that the vote had been a six to three split. However, with only one member of the committee prioritising on economic worries rather than inflationary pressures experts think that it is now likely that if rates do come down in February it will only be a marginal cut.
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