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Last Updated: Wednesday, 25 January 2006, 10:30 GMT
Dove splits MPC for second month
Bank of England
The Bank's split fans hopes for a near-term rate cut
The Bank of England's rate-setting committee voted 8-1 to keep the cost of borrowing at 4.5% earlier this month, latest minutes show.

One member of the Monetary Policy Committee (MPC), Stephen Nickell, broke ranks for the second month in a row to push for a quarter-point rate cut.

But interest rates were kept steady for the fifth month running.

The MPC had unanimously voted to keep rates steady during November, October and September.

Mr Nickell argued that economic growth had been below trend for some time and said he believed projections made in the Bank's November inflation report appeared too optimistic.

Waiting game

Inflation was likely to fall below target once the effects of higher energy prices were accounted for, he claimed.

However, the rest of the committee's members said UK growth was broadly in line with expectations and that inflation would meet targets.

They cited stronger-than-forecast signals from the services sector, consumption growth and the housing market.

The Bank of England's next quarterly inflation report is due in February and will be a key influence on the future direction of interest rates.

"It looks like the MPC are playing their cards very close to their chest, with a bias towards easing still lurking beneath the surface," said David Brown, economist with Bear Stearns.

"We think that the odds probably still fall on the March MPC meeting for the next quarter-point cut."

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