Bank of England remains split on rates

AP News
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Posted: Sep 17, 2014 5:00 AM

LONDON (AP) — Bank of England policymakers remain divided on whether to raise interest rates, voting 7-2 at their last meeting in favor of keeping the main rate at a record low 0.5 percent.

Minutes from the Sept. 3-4 meeting show Wednesday that policymakers retained the status quo even as Europe's third-largest economy recovers at a brisk pace. With inflation at 1.5 percent, below the 2 percent target, pressure to raise rates remains muted.

Two policymakers argued that a tighter labor market might cause wage growth to accelerate. Ian McCafferty and Martin Weale suggested that since monetary policy operates with a lag, the bank should anticipate market pressure by raising rates in advance.

Meanwhile, a separate report showed unemployment dropped to 6.2 percent in July, the lowest since 2008, from May's 6.4 percent.