Detail of the MPC’s May meeting revealed rate setters are edging closer to a decision to hike interest rates, while UK retail sales in April reached the strongest level of annual growth since 2004.
The two announcements, published at the same time, pushed sterling to an intra-day high of $1.6920 against the dollar, up from $1.6887, earlier this morning.
Although all MPC members voted to keep interest rates and gilt purchases unchanged, economists suggest some rate setters are not far off from voting for a rate hike.
“For some members the monetary policy decision was becoming more balanced,” the minutes stated.
During this month’s meeting, committee members agreed that at this stage a rate hike would be “a last line of defence” against the boom in the housing market.
Yet the signs of a strengthening economy are evident from the strong sales numbers, with retail sales up 1.3% between March and April and 6.9% over the year, their fastest growth in a decade.
The food sector saw its fastest annual growth since 2002, while food store price inflation halved in April compared to the previous month, down from 1.8% to 0.9%, as supermarkets stepped up price competition following a weak start to the year.
