Fxstreet.com (Barcelona) - The Bank of England's Monetary Policy Committee approved by 6 votes against 3 to cut its Bank Rate by 25 basis points to 5.0%, with the committee split in three opinions for the first time since May 2006, according to the Bank's minutes.
While most of the members of the committee voted for a 0,25% rate cut, Tim Besley and Andrew Sentance preferred to maintain Bank Rate at 5.25%, and David Blanchflower was in for a 0,50% rate cut.
The Bank points out to upside as well as downside risks around its central projection for consumer prices inflation, which have, both, increased further on the month, as the February Inflation Report shows. At the same time, credit conditions have tightened and that will constrain spending, and thus, increase spare capacity and dampen inflation in the medium term.
The UK housing market has weakened and prices have fallen, however, mortgage arrears, and possessions still remain low, and employment continues rising, The Bank admits that some further price adjustments, on the down side, could be ahead, but there is still unclear how far the housing market developments could affect consumption.
Inflation has been running in levels around 2.5% in March. The Bank targets a 2.0% yearly CPI in the medium term.