Commenting on the MPC minutes published today, David Kern, Economic Adviser to the British Chambers of Commerce, said:
"Today's minutes highlight the difficult choices the MPC faces in the light of weakening growth and strong inflationary pressures. Eight members supported the decision to keep rates unchanged in May, but one voted for a cut even though most analysts expected the decision to have been unanimous.
"The minutes confirm the worsening pressures on economic growth. Output is already slowing and a further moderation is likely. House prices are falling, real incomes are weakening, and the supply of credit is tightening."In normal circumstances, the MPC would have been expected to cut interest rates. However, we understand their concern considering the prospect that inflation is likely to rise above 3% in the next few months before decelerating later in the year. We appreciate that it may be difficult for the MPC to cut rates at a time when the Governor could be forced to write to the Chancellor explaining the temporary upturn in inflation, but given the acute threat to economic growth, modest interest rate cuts later in the year should remain a realistic option for the MPC."