Committee finely split on interest ratespublished at 13:24 GMT
13:24 GMT
Faarea Masud
Business reporter
It was a narrow decision on interest rates for the committee today – four members wanted a cut but five members preferred to hold rates steady.
Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill voted to maintain rates at 3.75%.
Andrew Bailey changed his position from December, when he preferred a cut.
While they say inflation is coming down, they think it remains to be seen how falling inflation would pass through in to wages and prices of goods and services in the economy, which explains their cautious approach.
In December, the Bank of England’s Monetary Policy Committee voted 5-4 in favour of an interest rate cut, so it was Andrew Bailey’s switch that swung it this time.
Bailey says today’s decision was based on “accumulating evidence” that the economy is not being hit by “big new shocks”, and that the economy was subdued, while inflation fell. He adds that he expected a sharp drop in inflation in the coming months.
Sarah Breeden, one of the members who wanted a cut, says she placed “greater weight” on evidence that showed “elevated household saving rate and a weakening labour market”.
She says policy “should be eased a little faster than implied by the current market path”.
Dave Ramsden, who also favoured a cut, says policy should be “less restrictive” in order to the meet the 2% inflation target.
Alan Taylor says softening wages reduced “or even eliminates” the risk of persistently high inflation, meaning a likely scenario of rate cuts in the future.