The Monetary Policy Committee has recently reflected on the latest decision to maintain the current rate of 0.5% for at least another month.  The individual opinions remain the same.  The majority of the members still do not feel that a recent drop in inflation caused them to feel differently on how they vote.  Spencer Dale and Martin Weale are two MPC members who voted in favour of an increase in base rate earlier this month.  They were subsequently outvoted and the base rate remains at the historically low 0.5%.

There is no rest for the MPC in the coming month, as the inflation rate remains above the Bank of England’s target rate of 2.0%.  The Consumer inflation rate for the month of June stood at 4.2%.

Some of the latest MPC meeting minutes read as follows: “The risks to inflation in the medium term remained substantial in both directions. The committee set monetary policy to balance those risks around the 2% inflation target.

“If it were to become clear that one of those risks had crystallised - and the medium-term outlook for inflation had deviated materially from the target in either one direction or the other - the committee would respond by changing the stance of monetary policy.

“Most members judged that it was appropriate to maintain the current stance of monetary policy at this meeting. It was likely that the current weakness in activity would persist for longer than previously thought, although the reduction over the month in the exchange rate and in market interest rates would provide some countervailing stimulus to the economy.”