LONDON, Aug 20 - All nine members of the Bank of England's Monetary Policy Committee voted to keep interest rates at their 48-year low of 3.5 percent this month, minutes of their August 6 and 7 meeting showed on Wednesday. MPC members had identified various arguments that could have been put forward to justify a further cut in borrowing costs a month after the committee cut them by a quarter-point, but said that none of them were persuasive. Similarly, the minutes said the argument for a rate hike was not convincing.
"The central projections to be published in the August Inflation Report suggested that, after the previous month's reduction, no change in the repo rate was necessary, but it was important to consider the balance of risks," the minutes said. The BoE's quarterly report last week predicted that inflation would fall back to below its 2.5 percent target in the coming year before rising to just above it in two years. The BoE said that the current level of interest rates continued to imply that the policy stance was accomodating, adding that "at some stage, this expansionary stance would have to be moderated." But it added a rate rise was not yet appropriate when inflation was seen below its target for much of the next two years. Possible arguments for a rate cut included that there were downside risks to domestic demand but some MPC members said that an unexpected rate cut could trigger an inflationary fall in sterling and risked boosting consumer spending and debt further.//