UK Interest Rate: 5.25%

UK Interest Rates Forecast: Cut to 5% possible in April or May

MPC Minutes Reveal Deputy Governor Voted For Cut

When the Bank of England Monetary Policy Committee (MPC) met at the beginning of March, they voted 7-2 to maintain the base interest rate at its current level of 5.25%. That much we already knew.

What we didn't know was the identity of the two MPC members who voted for a cut. One was certain to be David Blanchflower, known for his dovish tendencies, but the identity of the second was less obvious.

This week, the minutes of that meeting of the MPC were published, revealing the votes cast by each member of the committee. The second member to vote for a cut in rates was Sir John Gieve, the Deputy Governor of the Bank.

This is a surprise move for Gieve. Global Insight economist Howard Archer, speaking to The Independent, suggests that the likely explanation may be "a consequence of his responsibility for financial stability at the Bank of England, and the particular threat to growth coming from tight credit conditions".

Whatever the explanation, most analysts think that Gieve's change of heart increases the chance of a rate cut in April - although May is still seen as more likely by some.

The MPC minutes also showed that the MPC believe that "output and CPI inflation were evolving broadly in line with the central projection in the February Inflation Report". This supports the expectation of the markets that there will be one further 0.25% cut sometime in the second quarter of this year, as per the Bank's own forecast.