No change in MPC vote may mean fading rate rise prospect - buy to let mortgages

20 August 2008

The prospect that buy to let mortgages may become cheaper rather than more expensive as a result of the next change in the Bank of England base rate could have increased after it was revealed that support for a rise in the rate has not increased this month.

Minutes of the August meeting of the Bank of England's monetary policy committee (MPC) revealed that the vote was identical to that in July, with seven voting for a hold and the options to cut or increase the rate by 0.25 per cent each having one supporter.

While this means that David Blanchflower is still the only advocate of a reduction, it is equally the case that Professor Tim Besley has not managed to persuade any of his colleagues to adopt his rate-increasing stance.

Such a situation may suggest that the MPC is largely set on riding out the current inflation storm, after which it could cut rates as the consumer prices index rate falls.

Professor Besley had explained his position in a Sun article earlier this week in which he said to cut rates would risk a return to 1970s style high inflation.