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Wednesday, 18 October, 2000, 09:50 GMT 10:50 UK
Bank of England shifts rate stance
The Bank of England's Monetary Policy Committee at its meeting on 4 October
Speaking with one voice: MPC members want to keep rates on hold
The Bank of England's Monetary Policy Committee (MPC) voted unanimously to keep UK interest rates on hold in October.

This breaks a series of close votes, where the committee voted five to four for leaving rates unchanged.

UK interest rates have been set at 6% since February this year, but financial markets and British industry were worried that the bank might be tempted to raise rates in an attempt to squash inflation.

Such a move could have made shares a less attractive investment and hurt stock markets, and would have driven up the pound against the euro, damaging UK exporters.

No risk of inflation

But despite sharply rising oil prices and slightly higher wage settlements, the MPC decided that inflation was not a threat for now.

The MPC noted that the UK economy was slowing down and said there had been "little decisive news over the month to alter the Committee's view of the underlying path of the UK economy".

The biggest surprise for the MPC was the fact that salaries are growing at a modest pace, despite unemployment rates dropping to a 20-year low.

The committee members agreed it would be wrong to act on the mere suspicion that earnings could rise suddenly and decided to wait until the risk actually materialised.

The committee's views will be read by many City analysts as a clear indication that interest rates in the UK have peaked.

This would be good news for shareholders, exporters and mortgage holders, although less welcome for people with savings accounts and other cash investments.

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20 Sep 00 | Business
UK interest rates 'on knife edge'
05 Oct 00 | Business
UK interest rates unchanged
12 Sep 00 | Business
UK inflation at record low
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