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Last Updated: Thursday, 12 October 2006, 14:23 GMT 15:23 UK
New MPC men see inflation falling
New Monetary Policy Committee member Timothy Besley
Mr Besley is a professor at the London School of Economics
Cooling global oil prices should help reduce UK inflation in the coming months, according to the Bank of England's two new policymakers.

But the newest members of the Bank's Monetary Policy Committee (MPC), Andrew Sentance and Timothy Besley, also think UK wage growth is still a concern.

Analysts said their comments to the Treasury Select Committee did not show where they stood on interest rates.

The MPC is expected to raise rates when it meets again next month.

It last increased rates by a quarter of a percentage point to 4.75% in August, keeping them on hold in both September and October.

Significant worry

While Mr Besley and Mr Sentance agreed that falling oil prices should help bring down inflation in the short term, the potential for prices to rise rapidly remains a concern.

New Monetary Policy Committee member Andrew Sentance
Mr Sentance used to work for British Airways

"In terms of inflation, there is the risk if we have continuing inflation above target that it does begin to feed into wage increases," said Mr Sentance.

"That's a significant worry that we have to reassure ourselves on."

UK inflation rose to 2.5% in August, above the government's 2% target.

Global oil prices hit record highs in July due to the conflict in Lebanon, but have since fallen by 20%.

"I am not sure either of the testimonies [by Mr Besley and Mr Sentance] gives firm clues on rate prospects in the next few months," said Investec chief economist Philip Shaw.

Mr Sentance was formerly chief economist at British Airways, while Mr Besley is a professor of economics at the London School of Economics.

The Monetary Policy Committee has nine members in total.


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