Policy makers at the Bank of England voted by a narrow five to four margin to keep its lending rate unchanged at 3.75pc earlier this month. According to the minutes of the monetary policy committee meeting on 8 May, Christopher Allsopp, voting for the eighth consecutive time to lower rates, was joined by Kate Barker, Marian Bell and Stephen Nickell on the dissenting side. This was Allsopp's last meeting as a member of the committee. Arguing for a rate reduction, the doves warned of "downside risks to activity". They said consumption might weaken further and house price inflation could slow more rapidly than expected.
They also argued that a cut was appropriate as GDP growth was forecast to be below trend throughout the next two years while inflation was seen falling below the 2.5pc target in 2004. But the hawks believed it would be "prudent to wait to see" if sterling stayed at its new lows and to leave more time to assess the evolution of business and consumer confidence after the war in Iraq. They added a rate cut could weaken sterling further, hitting UK exports to the eurozone.//www.fxcentre.com