At the committee’s meeting held on 4 November, MPC member Ian McCafferty voted for the third consecutive month to increase the bank rate by 25 basis points.
The committee voted unanimously to maintain the Bank’s stock of purchased assets at £375m.
McCafferty raised concerns that the risk of domestic costs rising more rapidly than previously thought, was sufficient to warrant an immediate increase in the Bank Base Rate. He added that an immediate start to policy normalisation would support a more gradual path for the rate over time.
However, members believed a more gradual increase for interest rates would help to bring inflation to target in the face of “global weakness”.
According to the Bank’s meeting minutes, despite concerns surrounding the economic outlook in emerging markets, the MPC said risks to the UK laid ‘to the downside’.
All members agreed that when the Bank Base Rate did rise, it was likely to do so more gradually and to a lower level than in recent cycles, and reiterated that its guidance on the path of a rate rise was an expectation and not a promise. It noted that changes in the Bank Rate over the next few years would depend on economic circumstances.
