Only one of the nine-strong Bank of England Monetary Policy Committee voted to raise interest rates this month, despite the market having been split right down the middle over whether or not the central bank would hike. Minutes of the April 7 and 8 meeting MPC meeting showed Deputy Governor Andrew Large had wanted an immediate quarter-point rate rise but was outgunned by the rest of the MPC who opted to leave rates steady at 4.0 percent. Still, most of the MPC argued that with the economy still growing above trend and with little capacity, it would be appropriate to raise interest rates "in due course". But they said that there so far did not appear any need to raise rates any faster than had been implied by the market yield curve shown in the February Inflation Report.
Members were also worried by the continuing strength of the exchange rate which offset the inflationary impact of the strong house price growth. They said that the pound had not fallen back toward its level at the start of the year and so warranted more weight this month than in March. The MPC also identified several arguments for a rate rise this month, notably that higher borrowing costs now might "help to discourage unsustainable rates of house price inflation." "That would address an upside risk to consumption in the near term and also reduce the risk of a sharp correction to the housing market and to consumption later," the minutes said. One member, probably Large, was particularly worried by rising consumer debt levels which could raise the vulnerability of the economy to shocks. ///