Rising oil prices a worry for Bank of England

Bank of England officials were worried about rising oil prices and possible wages rises when they left interest rates on hold this month, according to minutes released today.

Members of the monetary policy committee (MPC) voted seven-to-two in favour of keeping its quantitative easing programme on hold at £325 billion, with Adam Posen and David Miles again demanding a rise in asset purchases to £350bn.

Richard Driver, an analyst for Caxton FX, said: “The MPC minutes certainly caught us by surprise, we were expecting a unanimous vote in favour of leaving the BoE’s quantitative easing programme on hold.

“Adam Posen is always a risk on the ultra-dovish side, though a vote of £25bn seems a little pointless.”

Markit chief economist Chris Williamson said: “Although it is likely that policymakers will keep policy unchanged for some time, especially in the light of growing concerns about the impact of high oil prices on inflation, any downturn in the pace of economic growth could rapidly reignite calls for further stimulus.”

To read the full minutes from the Bank of England’s monetary policy committee meeting visit www.bankofengland.co.uk