It has been reported that the Monetary Policy Committee (MPC) is against the idea of increasing the Bank Rate. The MPC is pushing for a record-low level of Bank Rate. The members of the committee have voted for keeping the bank interest rates low at 0.5% level.
As many as nine committee members have expressed their desire to keep the bank rate low. However, just two have voted against of it. While making a decision over the bank rate, the MPC’s members said that their decision is governed by the increased fuel prices which are posing a risk to the growth of the economy.
The policymakers were reported as saying, “There was a risk that this might be a less powerful restraining force in the future, especially if another round of energy price rises were to materialize”. It is expected that the inflation might get a little higher, which would adversely affect the economy.
However, it is further predicted that the inflammation would fall by 2% by the end of this year. Because of the sluggish recovery of the economy, the inflation would be witnessed at a higher pace, this year. The MPC has emphasized over maintaining low level of Bank Rate so that control over inflammation could be established.