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Little support for rate cut in MPC meeting

The Bank of England's monetary policy committee (MPC) voted overwhelming in favour of keeping interest rates on hold last month, it has been revealed. Minutes from the MPC's meeting show that eight of the ten-member committee voted to maintain rates at their current level. Two members, John Gieve and David Blanchflower, had argued for a cut of 0.25 per cent to stimulate economic growth. The minutes reveal that the motivation behind the decision were concerns over rising inflation and the fact that two consecutive rate cuts could send the wrong message to the financial systems. "Back-to-back reductions might lead observers to think that the committee was focusing on downside risks to demand at the expense of the medium-term outlook for inflation," the minutes said. "That in turn could lead to an exaggerated response of the market yield curve to a rate reduction."In February the Bank cut interest rates by 0.25 per cent to bring them to five per cent.

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