MPC’s 8-1 Majority Votes to Keep UK’s Interest Rates Unchanged

This article was last updated on April 16, 2022

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The Bank of England has once again voted by a complete majority of 8-1 to keep interest rates on hold at 0.5%. In addition to that, the bank also lowered its expected economic growth for the UK in the third quarter of this year from 0.7% down to 0.6%.

Ian McCafferty was the only member of the Monetary Policy Committee (MPC) to vote for an increase in rates. Being the only person to have voted to increase the rate last month as well, McCafferty claimed that the risks from slowing Chinese economy had increased since August. According to the summary presented by the committee, it said that “developments since then have increased the risks to prospects in China, as well as to other emerging economies.” The summary stated that “global developments do not as yet appear sufficient to alter materially the central outlook described in the August Report, but the greater downside risks to the global environment merit close monitoring for any impact on domestic economic activity.” It was indicated that the reduction in UK’s growth forecast was due to the latest poor manufacturing and industrial production figures.

At the end, the MPC presented an overall optimistic view of the UK’s economy. It mentioned that “domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence.” The summary alleged that “the rate of unemployment has fallen by over two percentage points since the middle of 2013, although that decline has levelled off more recently.”