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BoE divided over interest rates BoE divided over interest rates
(3 days later)
The Bank of England's decision to keep interest rates on hold at 5.5% this month was agreed by a vote of just five to four, minutes have revealed.The Bank of England's decision to keep interest rates on hold at 5.5% this month was agreed by a vote of just five to four, minutes have revealed.
Four members of the Bank's Monetary Policy Committee voted for a quarter-point rise in June, including Bank of England Governor Mervyn King.Four members of the Bank's Monetary Policy Committee voted for a quarter-point rise in June, including Bank of England Governor Mervyn King.
The tight vote may increase the chances of further rate rises, analysts said.The tight vote may increase the chances of further rate rises, analysts said.
It is only the second time that the governor has been on the losing side of the Bank's monthly rate decision.It is only the second time that the governor has been on the losing side of the Bank's monthly rate decision.
Interest rates are currently at 5.5% after four increases since last August in an attempt to rein in inflation.Interest rates are currently at 5.5% after four increases since last August in an attempt to rein in inflation.
Consumer price inflation fell to 2.5% last month from 2.8% in April, but it remains above the government's 2% target.Consumer price inflation fell to 2.5% last month from 2.8% in April, but it remains above the government's 2% target.
Rare defeatRare defeat
Mr King was joined in opposing this month's rate freeze by Deputy Governor John Gieve, and committee members Tim Beasley and Andrew Sentence.Mr King was joined in opposing this month's rate freeze by Deputy Governor John Gieve, and committee members Tim Beasley and Andrew Sentence.
The Bank of England has put the markets on notice to batten down the hatches for a July rate hike Economist Dave BrownThe Bank of England has put the markets on notice to batten down the hatches for a July rate hike Economist Dave Brown
They were outvoted by the remaining five members, including Deputy Governor Rachel Lomax and chief economist Charles Bean.They were outvoted by the remaining five members, including Deputy Governor Rachel Lomax and chief economist Charles Bean.
Analysts had predicted that the vote split at May's meeting was likely to have been 7-2 in favour of a freeze. Analysts had predicted that the vote split at the meeting was likely to have been 7-2 in favour of a freeze.
"The Bank of England has put the markets on notice to batten down the hatches for a July rate hike," said Dave Brown, chief European economist at Bear Stearns."The Bank of England has put the markets on notice to batten down the hatches for a July rate hike," said Dave Brown, chief European economist at Bear Stearns.
"It was not just the close vote - 5-4 - but the fact that King threw his weight behind calls for a hike in June that shrieks out higher rates ahead.""It was not just the close vote - 5-4 - but the fact that King threw his weight behind calls for a hike in June that shrieks out higher rates ahead."