(by M.Riley)

On Wednesday bank of England held monetary policy meeting discussing potential raising interest rate. As it was said in its minutes MPC voted unanimously to raise rates by a quarter point to 4.75 per cent instead of expected half a percentage point.

It was also considered to leave rates unchanged.

Last week MPC indicated that interest rates were close to the peak, with only one or two more possible rises before the end of next year. Five “major downside risks” to inflation were noted by the MPC in the minute - a more abrupt house price correction, a slower pick-up in inflation given the low level of inflation expectations, a narrowing in profit margins, weaker external demand in oil prices rise further and a higher potential GDP growth rate; it also reminded of two upside risks - stemming from a widening of profit margins and the tightness of the labour market.

The minutes also indicated Bank’s new dovish position meaning the MPC has no intention to raise rates soon.

In the most recent quarterly inflation report governor Mervyn King noted that new dovish outlook was “remarkably benign”.

Specialists predict next inflation rise (to 5 per cent) in November, saying that the inflation report implied only one more rise after that, most likely next year. Inflation is foreseen to hit Bank’s 2 per cent target within two years.