Split between rate setters over latest rate movement

According to the minutes of the latest Monetary Policy Committee meeting, there was a 7-2 split between the powerful MPC members with regards to the latest interest rate movement that followed the March Monetary Policy Committee meeting.

It appears that two members voted to cut the rate by 0.25% to 5%, including the vice governor of the Bank of England, Sir John Gieve, who backed David Blanchflower.

However, with seven members, including the governor of the Bank of England, Mervyn King, voting to keep rates on hold due to pressures over inflation the interest rate remained unchanged at 5.25%. The Bank of England last cut rates in February by 0.25%, and previously in December 2007, but a further 0.25%.

However, between August 2006 and July 2007 there were five interest rate hikes of 0.25%, so many homeowners are still struggling with mortgage repayments despite the two recent rate cuts.

Industry experts were of a split opinion with regards to whether there would be a further rate cut in March, but with rate setters having to consider inflation risks as well as the risk of a slowing economy. Fears over the slowing economy have been eased somewhat as a result of recent figures that showed a surprise increase in retail sales over the month of February, indicating that consumers were still spending.

In the meantime the US Federal Reserve has slashed its interest rates once again, which means that over the past six months the Fed has cut rates by 3% from 5.25% to just 2.25% in a bid to assist the failing economy and minimise the risk of recession.