BoE remains split on interest rate hike

For the fourth months in a row the Bank of England policy makers remain split on interest rate hike, with two officials voting for an immediate rate increase, the November Monetary Policy Committee minutes showed. Martin Weale and Ian McCafferty, who stack to their call to raise rates by 0.25 percentage points to 0.75% for the fourth straight month, argued that low inflation, which stood at 1.3% in October, was largely the result of a stronger Pound and lower commodity prices. However, some of those, who were in favour of keeping rates at the ultra-low level of 0.5% amid weak outlook for inflation, thought there was a threat that the UK's growth might soften more than projected, while inflation may stay lower for longer. This might leave the nation's economy vulnerable to shocks in rates increased too soon. However, others stressed a risk that spare capacity could be used up more rapidly than the central bank's latest forecasts show. This could lead to inflation overshooting the Bank's 2% target. In general, the tone of the minutes indicated some top BoE policy makers were less sure of the necessity to keep interest rates on hold going into 2015. However, policymakers agreed that while Britain's growth was slowing, output was still expected to rise at close to the historical average. Most officials also agreed that while domestic price pressures remain subdued, recent increases in private sector pay growth indicated "there were good reasons to expect it to rise over time".