Andrew Sentance stands alone on MPC
Andrew Sentance again stands alone on the Bank of England MPC with minutes from last month's meeting showing that members voted 8-1 in favour of maintaining UK base rates at 0.5%. Yet again, Andrew Sentance was the lone voice in favour of a 0.25% base rate rise as he believes a rebound in UK domestic demand could cause problems for the UK economy next year.
The vast majority of members of the MPC believe that the UK economy is showing signs of weakening in the latter part of 2010 and 2011 and indeed we could see the introduction of new fiscal stimulus program such as quantitative easing. While last month the issue of inflation appeared to fall by the wayside, this month it is back on the agenda with serious concerns that in the short-term we could see a significant rebound.
At this point of the economic cycle, a cycle which few people have ever experienced before, the MPC has a very difficult job on its hands. If UK base rates are increased too quickly this will effectively kill the economic revival but if base rates remain low for too long this will stir the monster which is inflation and could have far-reaching consequences.
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