Bank of England hints at further interest rate cuts
The Bank of England’s economic experts voted decisively in favour of a quarter-point interest cut, it emerged today.
The minutes of the nine-member Monetary Policy Committee meeting, held two weeks ago, showed that only Sushil Wadhwani - one of the group’s arch "doves" - wanted a more aggressive half-point cut.
The remaining eight, including Bank of England governor Sir Edward George, preferred to match the previous month’s cut and lower interest rates to 5.25%.
The report today appeared to suggest that further cuts could be on the way as part of a "gradualist" approach adopted by the committee.
Most members believed a series of small cuts were preferable to allow the Bank of England to retain more control over the economy.
The minutes said: "A series of small cuts would have greater announcement affects and so would be more effective in supporting household confidence, when that became necessary, than a single large cut.
"The gradualist approach the committee have been adopting made it easier to explain policy and so influence behaviour in the economy."
Members also warned that a larger half-point cut risked sending a signal that the committee thought economic prospects were bleaker than they really were.
The report said there had been little domestic news to suggest a worsening in the country’s economic plight, but that data had on balance been weaker.
Those voting in favour of a quarter-point cut also believed it was prudent to see how the slowdown in the United States developed.
In April, three members voted unsuccessfully for a half-point cut.
