23 November 2006
Consumers with secured loans breathed a tentative sigh of relief yesterday as the threat of a further interest rate rise was lowered by the news that the decision to raise it earlier this month was not a unanimous one.
The monetary policy committee (MPC) has released the minutes from the recent meetings that decided to raise the interest rate to 5% and revealed that two of the seven vote casting members dissented to the increase.
One of those opposing the quarter point rise, David Blanchflower, was wholly expected, but the vote of Rachel Lomax, one of the Bank of England's (BoE's) deputy governors responsible for monetary policy, was a complete surprise as previously she had always voted with Mervyn King, the BoE's governor.
Uncertainty over a possible further rate rise is encouraging news for any consumers who have debts like secured loans, since it means that there is a possibility that the repayment amounts will not increase in the future.
However, wage rises could yet affect the decision, thought to be reanalysed in February next year, because if workers negotiate higher wages to help combat the interest rate, it could have a vast impact on inflation.
© 2008 Adfero Ltd
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