Minutes of the Monetary Policy Committee Meeting held on 7th and 8th January 2015 have been released by the Bank of England. The minutes saw the unveiling of all nine Policymakers voting to keep the Base Rate at its all-time low of 0.5%. This was a shift from previous meetings as two of the Policymakers; Mr Weale and Mr McCafferty have been voting to raise the rate to 0.75% since the summer.
Mr Weale and Mr McCafferty’s reasoning behind altering their vote from increasing the Base Rate to keeping it the same, stemmed from their belief that the sharp fall in inflation had been driven by temporary factors, not that there was still a risk low inflation may last.
The minutes also illustrated that as a result of Mr Weale. and Mr. McCafferty’s shift in vote any expectation that the Base Rate may rise in 2015 are slim. Commenting on the Bank’s vote, Martin Beck, Senior Economic Adviser to the EY Item Club, said: “Today is a confirmation that there is very little prospect of any rate hike this year with the two arch hawks of the MPC voting to maintain the status quo’.
Last month inflation fell to its lowest rate in over 14 years to 0.5% which is also below the Bank of England’s target of 2%. Further to this, the minutes revealed that the BoE thought there was “a roughly even chance” that inflation, which fell to 0.5% in December, could dip below zero in the first half of 2015. All in all, the interest rates landscape remains bleak for savers for the forcible future.
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