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Bank Of England Minutes Show Interest Rate Rise Was Considered

In a move which further strengthens the belief that the Bank of England will raise UK base rates sooner rather than later, the minutes from the June meeting show that the move was considered. It seems as though two members suggested a pre-emptive strike although there was little follow through with a vote of 8-1 to hold rates at the current level.

One suggestion for an early rise was to try and contain the rising level of inflation but there were some committee members who believed that this would give the wrong impression and might spook the markets. While a short term rise in rates is not inevitable there is growing support amongst economists to try and subdue the inflationary pressures which are building up.

On the other side of the argument there is concern that rates need to fall further to kick start the ailing UK economy and take away some of the doom and gloom which is setting in amongst consumers. There are even some observers who are going as far as to suggest that we may risk possible stagflation, whereby the economy does not grow but inflation continues to push ahead, something that would be a disaster for the UK economy.

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