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Wednesday, 20 January 2010

Reaction to the Monetary Policy Committee meeting minutes for January 2010

By Brian Sloan, Head of Business and Economic Policy

Reacting to the contents of the published minutes of this month’s Bank of England Monetary Policy Committee (MPC) meeting published today, Brian Sloan, Head of Business and Economic Policy at the Chamber, said: “After yesterday's, higher than expected, inflation figures businesses across Greater Manchester will be encouraged by today's publication of the minutes of January's Monetary Policy Committee minutes by the Bank of England. Whilst the inflation figures raised expectations of interest rate increases sooner rather than later, the minutes reinforce the committee's stance that although volatile, it is the medium term prospects for inflation that are the "key consideration when setting monetary policy", and therefore we expect that interest rates will be held at 0.5% in the coming months.

“The minutes also show that the Bank anticipated higher than predicted inflation for December, though it still expects CPI inflation to fall back towards the 2% target in the medium term as spare capacity and a disruption to the supply of credit acts as downward pressure on inflation. Accordingly the committee voted unanimously to hold interest rates and continue the asset purchase programme at £200bn and did not consider alternative propositions.”

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