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Bank of England considered interest rate tise

Jun 19 2008

RATE-SETTERS at the Bank of England considered hiking interest rates this month to try to keep a lid on soaring inflation, it was revealed.

Minutes of the Bank’s Mon- etary Policy Committee (MPC) showed that some of its nine members felt recent upward price pressure "had been suf- ficient to consider whether an immediate rise in the bank rate was warranted".

Data yesterday showed the annual rate of inflation reached 3.3% in May. But fears that an interest rate rise would prove "counter produc- tive" and impact on credit availability saw an 8-1 vote to keep rates unchanged at 5%. One member – David Blanchflower – voted for a cut.

The rise in the Consumer Prices Index revealed yester- day triggered a letter from Bank of England Governor Mervyn King to the Chancel- lor, warning that inflation could rise to at least 4% later this year, more than 2% above the Government's target.