29Oct
Inflation no longer a big threat, says MPC member
In news that may point the way to lower interest rates and
consequently cheaper mortgages, a former hawk on the Bank of
England's monetary policy committee (MPC) has said that the danger
of higher inflation has "diminished significantly".
Professor Tim Besley said that a combination of the economic
downturn, moderating prices in services and food as well as falls
in commodity prices all pointed to lower inflation being a more
likely prospect.
Such an outlook could help increase the chances that the MPC will
cut rates again soon, particularly as Professor Besley was
advocating a rate rise as recently as August.
During that MPC meeting and the previous one in July, he argued
that the priority was to conquer inflation to avoid greater
economic damage later on and voted for a 0.25 per cent
increase.
This was in contrast to David Blanchflower, who supported a 0.25
per cent cut while the rest of the body voted through the decisions
to keep the rate on hold.
