[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 22 February 2006, 10:31 GMT
Bank voted 8-1 to freeze UK rates
Bank of England
The committee was split 8-1 for the third month running
Prospects of an early cut in UK interest rates appear to have receded after the minutes of latest Bank of England meeting were published.

The minutes showed the Bank's Monetary Policy Committee (MPC) voted 8-1 to hold rates at 4.5% in February.

A revival in the housing market and a stronger forecast for consumer spending were behind the decision to hold rates.

For the third month in a row, Stephen Nickell was the only MPC member to vote in favour of cutting rates to 4.25%.

Mr Nickell considered the Bank's forecasts for consumption and investment growth to be too optimistic.

Inflation risks

There was some concern that a reduction in interest rates at this stage would provide further support to the housing market and consumption
MPC minutes

Last week, the Bank of England's latest inflation report hinted that UK interest rates were unlikely to see any imminent changes, with the Bank predicting that inflation would stick close to its 2% target over the next couple of years.

The report also forecast growth would recover from its current weakness to "around its historical average".

The MPC minutes said that for most of the committee's members, short-term prospects for consumption growth were stronger than at the time of the previous inflation report in November.

The minutes said there "was some concern that a reduction in interest rates at this stage would provide further support to the housing market and consumption at a time when GDP growth was already strengthening".

"That would increase the probability of inflation rising above the target in the medium term".

The committee also noted that recent gas price rises were likely to push on inflation, and there were concerns over future moves in energy prices.


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific