No change at MPC

The prospects of repossession may be falling for some people as the latest meeting of the Bank of England’s Monetary Policy Committee (MPC) saw no increase in support for a rise in interest rates.

Recent high inflation has led to speculation that there may be a change in the offing soon, something that could put more pressure on many homeowners struggling to meet their mortgage costs, to whom the cut to 0.5 per cent in March 2009 has been a lifeline.

However, the minutes of the April meeting that were published today (April 20th) showed that all nine members of the MPC voted the same way as they did in February and March.

Andrew Sentance remained the chief hawk, arguing for a 0.5 per cent hike, while Martin Weale and Spencer Dale continued to advocate a 0.25 per cent rise.

The other six remained firm in the view that the 0.5 per cent figure should stay for now, however, with Adam Posen also wanting to increase the asset purchase scheme. The other five wanted to keep everything as it is.

So while there is a four-way split on the MPC, this may no longer be an indicator of uncertainty and volatility, but a statement of fixed positions.

For those who do have mortgages and are struggling, of course, debt management plans may still be very useful and this will guard against any change.

However, there may be two reasons to think a base rate rise is some way off.

One is the fact that Consumer Price Index inflation fell last month from 4.4 per cent to four per cent.

The other is that Andrew Sentance is running out of time to influence change, since next month is his final MPC meeting before he leaves the body.