ONDON (AFX) - The Bank of England's Monetary Policy Committee voted eight to one to hold repo rates at 5.25 pct on July 5, according to its meeting minutes released today.
The minutes show that independent MPC member Sushil Wadwhani voted for a 25 basis point cut for the second straight month. In May he had backed a 50 basis point rather than a 25 point reduction.
The dissenting view was that the repo rate should have been cut to 5 pct at the June meeting and nothing had changed since then to alter this view.
The committee agreed that news over the month had not altered their views on policy. Some members, however, acknowledged that the news made it "rather less likely that the next movement in interest rates would be down".
The minutes revealed that the MPC felt that prospects for the world economy were mixed. While there had been promising news from the US, the outlook for Japan and the euro zone appeared to have deteriorated from a month ago.
With sterling remaining stronger than projected in the May inflation report, and given the importance of the euro zone to UK exporters, the prospects for net trade had weakened, the minutes said. However, other domestic indicators remained robust, the MPC said, citing retail sales, household credit, the housing market and consumer confidence.
There was also few signs that the labour market was yet on the turn, although some forward-looking indicators continue to suggest that it might be soon.
The minutes said much of the recent increase in RPI-X inflation reflected temporary factors such as seasonal food prices and oil prices.
MPC members were at odds over the implications of the imbalances within the domestic economy. For some, the risk that the exchange rate was more likely to fall than to rise further in itself affected the inflation outlook, and so should be considered when interest were set. Others, however, questioned how far policy should seek to anticipate a fall in the exchange rate.
The MPC agreed that the situation should be monitored with preparedness to "adjust rates in either direction in the light of new information".