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After five base rate rises in the past year and with rates now at a six year high of 5.75%, observers are now discussing the possibility of a further quarter point rise in early August 2007.
The recently released minutes of the last Monetary Policy Committee (MPC) show that members voted 6-3 in favour of the July increase. With inflation running at 2.4%, still higher than the target figure of 2%, industry executives see the recent comments as a sign of more to come.
Some claim the impact of previous rate increases has still to take effect and without waiting for this to happen, the MPC is in danger of overdoing things. The committee claims to have seen no slow down in consumer spending or a cooling of the housing market.
One observer claimed that the consumer Price index (CPI) would have returned to the 2% level anyway, without this most recent increase. Suggestions are the MPC could always drop rates back if rate increases are later seen to have been too severe.
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